﻿VIEWPOINT
Equal wieghtage assigned to all
variables has substantially altered
State rankings.
The report's
recommendation of putting
an end to special category
States is welcome. But the
Rajan panel's process of
correcting the wrongs
appears to be based on
flawed premise. It is more
like the cure getting worse
than the disease.
A recipe for disaster
Anew report by a committee headed by Reserve Bank of India Governor
Raghuram Rajan has opened a Pandora's Box. The Committee for Evolving
a Composite Development Index for the States has recently released its
report and also set forth a deluge of criticism.
The committee has drawn up a new methodology that has thrown up shockingly-new
ranks of States. Accordingly, Odisha has been ranked as the
country's most backward State, while Bihar, which has been seeking a special
status is the second-most backward State. Gujarat has been relegated to
the ranks of the less developed States, while Goa is the country's most developed
State.
The Union government had constituted the committee to suggest ways to
identify indicators of relative backwardness of States for equitable allocation
of Central funds. Currently, Central allocations are governed by the
Gadgil-Mukherjee formula that places the greatest weight on the State's population.
Besides, other factors, like per capita income and literacy, among
others are some of the major determinants.
The Rajan committee has proposed an index of backwardness composed
of 10 equally-weighted indicators - monthly per capita consumption expenditure,
education, health, household amenities, poverty rate, female literacy,
percentage of Scheduled Caste and Scheduled Tribe population, urbanisation
rate, financial inclusion and physical connectivity. Based on these 10 variables,
the report has designed a formula for Central allocation to States.
Each of the 28 States will get 0.3 per cent of the overall Central funds
allocated. Of the remaining 99.7 per cent, three-fourths will be allocated
based on the need and one-fourth based on the State's improvements on its
performance, to be reviewed every five years. With States now classified as
special category will find their needs met through the new allocations, the
panel has called for doing away with the term special category. If the recommendations
are accepted, Bihar, Madhya Pradesh, Odisha, Rajasthan and Uttar
Pradesh will get a larger share of Central funds, while Kerala, Tamil Nadu
and Maharashtra will lose substantially.
Critics have been quick to point out inherent flaws in the report. Shaibal
Gupta, a development economist and one of the panel's five members, has
disagreed substantially with the panel's choice of indicators in a long dissent
note appended to the report. Mr Gupta's most significant disagreement is
with the panel's decision to use monthly per capital expenditure derived from
the National Sample Survey Organisation (NSSO) reports as a measure of
income rather than per capita State domestic product. He points out that this
criterion has substantially altered State rankings.
Equal weightage of disparate variables makes no sense at all. Economists
argue that the per capita expenditure variable should logically have a greater
weight than household amenities because the latter, after all, is derived from
the former. Any inter-State ranking should identify the variables, figure out
a method of normalisation, assign weights to the identified variables and
decide on a method of aggregation. But instead if equal weightage is assigned
to all the variables, the net result will be nothing short of a disaster.
The report's recommendation of putting an end to special category States
is welcome. The nation has witnessed some of the most debased politics that
goes into declaration of special category States. But the Rajan panel's process
of correcting the wrongs appears to be based on flawed premise. It is
more like the cure getting worse than the disease.
6 OCTOBER 2013 INDIA BUSINESS JOURNAL

﻿

﻿NEWS ROUND-UP
MISCELLANEOUS
Pension Bill finally
passed after 8 years The
Parliament recently passed
the crucial Pension Fund
Regulatory and Development
Authority Bill, 2011, which
will open doors to foreign
investments, create a
regulator and cover more
people. The Bill, which was
hanging fire since 2005, when
it was first introduced in the
Parliament, was reintroduced
in 2011. The Bill will allow
subscribers seeking minimum
assured returns to opt for
such schemes. A subscriber
will also have the option of
investing all his funds in
government securities. The
foreign investment limit in
pension is tagged to the cap
set for the insurance sector.
Railways eyes Rs 1,000
cr from land lease The
Rail Land Development
Authority, a statutory body set
up by the Ministry of
Railways for generating
income from vacant railway
land, is targeting revenue of
Rs 1,000 crore during this
Kerala allots Rs 500 cr for young entrepreneurs The
Kerala government has announced a plan to earmark an estimated
Rs 500 crore as Budgetary assistance to facilitate young
entrepreneurs in the State to pursue their dream ventures. Addressing
over 20 lakh school and college students via Google Plus
Hangout, the biggest-ever online connects in the State, Chief Minister
Oommen Chandy announced that his government would set
aside 1 per cent of the State's total budget expenditure for extending
financial support to young entrepreneurs. Apart from IT
and telecom in the past year, the plan will now be extended to key
areas, such as agriculture, health, tourism and culture. The
Kerala government already has a Student Entrepreneruship
Policy for youngsters coming up with innovative ventures when
still in college.
financial year from leasing out
land parcels to real estate and
retail players across the
country. The authority will
soon be opening a bidding
process for nine sites at
different places in the
country, including Mumbai,
Chennai, Visakhapatnam and
Vijayawada. These land
parcels, which will be leased
out for 35 to 45 years, can be
used to set up office space,
retail outlets and malls. Indian
Railways is estimated to have
about 43,000 hectares of
vacant land across the
country.
SEBI ups penalty for
fraud trades to Rs 25 cr
The SEBI has brought illegal
mobilisaton of funds through
collective investment schemes
under the ambit of Fraudulent
and Unfair Trade Practices
(FUTP) Regulations and
increased penalty on such
violations to Rs 25 crore from
Rs 1 crore. According to a
notification, a new clause, (t),
has now been inserted under
regulation 4(2) of the FUTP
Regulations. The stock
market regulator has defined
APPOINTMENTS
Toyota Kirloskar Motor
Vice-Chairman Vikram
Kirloskar, Ashok Leyland
Managing Director Vinod
Dasari and General Motors
India President and
Managing Director Lowell
Paddock have been elected
as president, vice-president
and treasurer of the Society
of Indian Automobile
Manufacturers respectively.
Partha Rakshit, the
proprietor of Partha Rakshit
Associates, has been elected
as the new chairman of the
Advertising Standards
Council of India.
P Sudhakar has taken over
as chairman and managing
director of Electronics
Corporation of India.
Rane TRW Steering
Systems MD Harish
Lakshman and Global
Autotech Chairman
Ramesh Suri have been
elected president and vicepresident
of the Automotive
Component Manufacturers
8 OCTOBER 2013 INDIA BUSINESS JOURNAL

﻿Verbatim...
"illegal mobilisation of funds
by sponsoring or causing to be
sponsored or carrying on or
causing to be carried on any
collective investment scheme
by any person as an unfair
trade practice".
FIIs can invest directly
in govt debt The SEBI has
allowed foreign investors to
invest directly in the debt
market by doing away with
the auction process. Foreign
institutional investors (FIIs)
and qualified foreign investors
can now invest in government
debt without purchasing debt
limits till the overall investment
reaches 90 per cent of
the permissible investment
limit. The auction will be
triggered only after foreign
Association of India
respectively.
G Mohan Kumar, the
former water resources
special secretary, has
assumed charge as the ateel
secretary.
S Anantha Chandra Bose,
the former deputy chairman
of Paradip Port Trust, has
taken over as chairman of
VO Chidambaranar Port
Trust (formerly Turicorin
Port Trust).
TIE-UPS
The Tea Board has joined
hands with Hindustan
Unilever to launch an
Indian large rural market
strategy to promote the
beverage in interior parts of
the country.
The SEBI has reached
regulatory cooperation and
information exchange pacts
with its counterparts in 31
European countries for a
greater oversight of hedge
funds and other alternative
investment funds with crossborder
presence.
investors' limit touches 90 per
cent of their total investment
threshold. Earlier, foreign
investors had to buy their
investment limit slots through
auctions. FIIs can invest a
maximum of $30 billion (about
Rs 18,000 crore) in government
debt.
FMC brought under
Finance Ministry The
Forward Markets Commission
(FMC) will now be under the
administrative control of the
Union Finance Ministry. The
move aims at better coordination
among regulators to
resolve the on-going National
Spot Exchange crisis and
chart out the future course of
action. The Consumer Affairs
Ministry had earlier agreed to
shift the commodity forward
trading regulator to the
Finance Ministry as it did not
have adequate manpower and
expertise to regulate the
complex commodity futures
markets. With this, all
financial sector regulators,
including SEBI, RBI, IRDA
and PFRDA, have been
brought under one umbrella.
Govt sets tough norms
for private placements
The government has limited
number of investors in private
placements to 200 persons
with a minimum investment
size of Rs 50,000 each in a
financial year. The new
norms have been put in place
to curtail abuse of the private
placement route of raising
funds. However, qualified
institutional buyers and
employees of a company
offered securities under
employee stock option plan
are exempted from the limit.
The number of such offers
too has been capped at four in
a financial year. Besides,
such offers can be utilised
only once in the quarter of a
calendar year, that too with a
minimum gap of sixty days
between any two such offers.
"A dedicated
financial institution,
on the lines of PFC
in the power
sector, should be
floated by the
Ministry of Steel."
C S Verma
CHAIRMAN, SAIL
"If I could do it
over again, I would
bring in more
people who understand
the importance
of balancing
social impact and
profitability."
Vikram Akula
FOUNDER, SKS MICROFINANCE
"Apple is about
'being fashionable',
amazone.com
'being cheap'
google 'knowing
more'... But
Microsoft is about
'doing more'."
Steve Ballmer
CEO, MICROSOFT
"I am not a great
fan of running any
company based
on visas."
N R Narayana Murthy
CHAIRMAN, INFOSYS
"There was too
much negativity,
which was not in
line with the fundamentals,
and so
now there's a
return to
rationality."
Anand Mahindra
CHAIRMAN, M&M
MISCELLANEOUS
INDIA BUSINESS JOURNAL OCTOBER 2013 9

﻿NEWS ROUND-UP
renewable energy The
over Rs 33,500-crore Hero
Group has entered the
renewable energy sector with
launch of Hero Future
Energies. Hero Future, an
independent power producer,
plans to develop 1 gw of
renewable energy across
various verticals of wind,
solar and hydropower by
2016-17. The company has
added that wind and solar
power will be initial focus
areas. It has already
commissioned a wind pilot
project of 37.5 mw in
Rajasthan, which is estimated
to provide clean energy to
about 70,000 households.
CORPORATEHero Group enters
Rasna to set up four
fruit juice units Rasna,
the market leader in the fruit
drinks concentrate powder
category, plans to invest about
Rs 100 crore in setting up
four facilities for juice bottling
in the next four years. After
being in the powder concentrate
business for years,
Rasna recently entered the
ready-to-drink fruit nectar
category with its Ju-C brand
in four different flavours -
mixed fruit, mango, apple and
orange. The company has
already invested close to
Rs 40 crore in two facilities in
Delhi and Gujarat. It is now
scouting for land to set up two
more facilities in southern and
eastern India.
Toshiba to buy Vijai's
T&D business Japanese
conglomerate Toshiba
Corporation will be acquiring
a major part of Vijai
Electricals' electricity
transmission and distribution
(T&D) business for approximately
Rs 1,300 crore. After
the deal, Toshiba is planning
to establish a new company,
which will absorb the acquired
business and also integrate
Toshiba's design and
manufacturing technologies
UltraTech buys Jaypee's unit for Rs 3,800 cr UltraTech
Cement, an Aditya Birla Group company, has acquired Jaypee
Cement Corporation's 4.8- mtpa Gujarat unit for Rs 3,800 crore.
As a part of the deal, expected to be closed in nine months,
UltraTech will take over Jaypee's debt of
Rs 3,650 crore. The Gujarat unit has a 57-mw, coal-based, power
plant with a 30-mw diesel generator back-up, limestone reserves
sufficient to run the plant at current capacity for 90 years and a
captive jetty in Sewagram. For Jaypee Associates, it is the first of
many expected deals aimed at pruning its
Rs 60,000-crore debt. The acquisition will raise UltraTech's capacity
to 59 mt and facilitate it to benefit from the Rs 350-crore
unrealised depreciation and tax set-off against losses incurred by
Jaypee Cement.
for T&D systems. The
acquisition will aid the
Japanese company to secure
a 20 per cent share in the
Indian market within five
years and also reinforcing its
position in the global market.
Piramal plans to triple
UK unit capacity Piramal
Healthcare is investing about
Rs 66 crore in its Morpeth
facility in the UK to triple its
production capacity for
hormonal products, including
contraceptive pills and
hormone replacement
therapies. The Morpeth
facility was acquired by the
Piramals from Pfizer in 2006.
The plant's expansion, in
response to customer demand,
will see production capacity
increase by 200 crore tablets
per year, according to a
company release. The facility
will include formulation,
package coating and tabletmaking
equipment. The
expansion work, set to
commence later this year, is
expected to be completed in
18 months.
AP Paper's sheeter unit
goes on stream International
Paper has set up a
Rs 100-crore sheeter unit at
the Rajahmundry facility of its
subsidiary, Andhra Pradesh
Paper Mills. The new facility
will take the sheeting capacity
of AP Paper up from 25,000
APPOINTMENTS
Tata BlueScope Steel has
appointed Riten
Choudhury as its managing
director.
Reliance Communications
has appointed Deepak
Khanna, a former Bharti
Airtel and Tulip Telecom
executive, as the CEO of its
India enterprise.
Ashok Vemuri, the former
head of Americas, Infosys,
has joined as CEO of
iGATE.
T V Narendran, Tata
Steel's vice-president (safety
and flat products), will take
tonnes a year to 90,000 tonnes
a year. Apart from convert
paper reels into A4, A3 and
foolscap products, the unit has
a facility for carton packaging.
US-based International
Paper has a 75 per cent stake
in AP Paper Mills and has so
far invested about Rs 3,300
crore in the subsidiary
company.
Great Eastern plans
float for CBM business
YK Modi-promoted Great
Eastern Energy Corporation
has filed a draft red herring
prospectus with the SEBI for
its IPO of up to 82 lakh
shares of Rs 10 face value
each. The issue comprises a
fresh issue of 78 lakh shares
and an offer for sale of up to
4 lakh shares of existing
investor YKM Holdings. The
company is a fully-integrated,
coal bed methane (CBM)
company focused on
monetisation of natural gas
from coal seams. The
company intends to deploy
funds raised from the fresh
issue for drilling and completion
of CBM wells in the
Raniganj (South) block and
general corporate purposes.
charge as the Tata Group
company's managing director
from November 1.
PepsiCo has appointed
Sanjeev Chadha, the global
beverage giant's president for
West Asia and Africa, as its
CEO for Asia, West Asia and
Africa.
Pawan Goenka, Mahindra &
Mahindra's president of
automotive and farm
equipment sector, has been
promoted as the company's
executive director.
TIE-UPS
Taiwanese handset maker
HTC has partnered with
mobile operator Tata
10 OCTOBER 2013 INDIA BUSINESS JOURNAL

﻿MITCO files papers for
Rs 25-cr IPO Pune-based
MITCON Consultancy &
Engineering Services has filed
a draft prospectus for an
initial public offer (IPO) of its
equity shares. The company,
which provides consultancy
and engineering services,
proposes to list its equity
shares on NSE Emerge, the
SME platform of the National
Stock Exchange. The IPO,
which will constitute 33.88
per cent of the company's
post-issue, paid-up capital,
aims to mobilise Rs 25.01
crore at a price of Rs 61 per
share. The proceeds of the
IPO will be deployed for
MITCON's expansion,
including acquisition of
property for setting up new
offices in Bangalore,
Hyderabad, Chennai, New
Delhi and Ahmedabad and
environment testing laboratories
in Bangalore and
Ahmedabad.
Pride and Privilege go
hand in hand Pride Hotels,
one of the fastest-growing
hotel chains in India, has
launched a loyalty
programme, Pride Privilege
Docomo to launch a range of
smartphones jointly over the
next five months.
Mahindra & Mahindra
Financial Services has tied
up with Woori Financials to
set up a joint venture for
financing Ssangyong Motor's
vehicles in Korea.
Infotech Enterprises, in
partnership with Alstom, has
set up a rolling stock and
components engineering
centre for Alstom Transport
in Bangalore.
Tech Mahindra has inked an
agreement with Volvo Car
Corporation to provide the
automobile company with a
service to maintain and
MP ranks 5th in project implementation Madhya
Pradesh (MP) has emerged as a major magnet for industrial development,
with the State ranking fifth among 16 major States in
implementation of investment proposals. With investor-friendly
Chief Minister Shivraj Singh Chouhan, MP has moved many
notches up in terms of implementation of investment projects, from
clearing 41 per cent of proposals in 2004-05 to 55 per cent this
year. Of the MoUs signed between 2007 and 2013, production
has started in 110 projects, entailing an investment of Rs 84,711
crore and providing jobs to about 1.5 lakh people. Besides, 175
projects worth Rs 74,614 crore are under various stages of construction
and 272 projects worth Rs 3,86,337 crore are under implementation.
With rapid industrialisation, Madhya Pradesh's Gross
State Domestic Product has recorded 15.34 per cent compounded
annual growth rate (CAGR) between 2003 and 2013, while its
industrial sector has witnessed a CAGR of 16.54 per cent.
Programme, for its valued and
frequent guests to offer them
an enhanced level of services.
The loyalty programme adapts
automatically to the frequency
develop a range of applications
for increasing efficiency
and reducing costs.
Biocon has sealed a deal
with US-based
Cytosorbents to bring a
novel therapy for sepsis
treatment into India.
ITC Hotels has tied up
with Ravi Pillai-led RP
Group Hotels and
Resorts to manage its five
hotels in India and Dubai.
The Trump Organisation,
led by US billionaire Donald
Trump, has tied up with
Mumbai-based Lodha
Group for developing the
over 800-foot-high Trump
Tower in Mumbai.
of guests' stay, offering them
many more advantages, such
as free stays, meal vouchers
and shopping vouchers,
among others. The loyalty
points can be earned at Pride
hotels in Ahmedabad, Pune,
Kolkata, Nagpur, Chennai,
Bangalore and can be
redeemed across all Pride
Hotels, Biznotels and Resorts
in India. The Mumbai-based
luxury hotel chain, which
operates 12 properties across
the country, is in the
midst of a Rs 1,000-crore
expansion plan.
Tata Sons, Singapore
Airlines in aviation JV
Tata Sons and Singapore
Airlines recently forged a
partnership to start a fullservice
airline. The Tata
Group's aviation foray comes
after nearly two decades after
its first attempt to operate an
airline in India could not take
off amid stiff opposition from
sections in the government
and other entrenched
interests. The two companies
revealed that the joint venture
would entail an initial
investment of $100 million
(about Rs 600 crore). This is
the third proposal in the
aviation sector since the
government allowed foreign
carriers to acquire a 49 per
cent stake in domestic airlines
last September.
ABP Group sells
Businessworld The ABP
Group has sold its business
magazine, Businessworld, to
Anurag Batra, owner of
media group exchange4media,
and Vikram Jhunjhunwala,
who runs investment banking
and asset management firm
Shrine Capital. The deal, in
which both the buyers have
invested in their personal
capacity, is expected to be
completed within a month.
The ABP Group, which also
publishes Bengali daily
Anandabazar Patrika and
English daily The Telegraph,
had been looking for a buyer
for the business magazine for
some time.
Thomson Reuters
acquires Omnesys
Thomson Reuters has
acquired Bangalore-based
Omnesys Technologies for an
undisclosed amount. Omnesys
is an integrated provider of
sell-side order management
systems and high-frequency
trading solutions for Indian
exchange-traded instruments.
The acquisition further
extends and complements
Thomson Reuters' financial
market data desktop and
feeds offering to the financial
industry in India. With
Omnesys in its fold, Thomson
Reuters can now offer Indian
customers a portfolio of
integrated solutions for
exchange-traded instruments.
CORPORATE
INDIA BUSINESS JOURNAL OCTOBER 2013 11

﻿NEWS ROUND-UP
FINANCE
Religare to buy out
Macquarie in wealth JV
Religare Enterprises will be
acquiring Macquarie's stake in
its wealth management joint
venture (JV), Religare
Macquarie Wealth Management,
for an undisclosed
amount. The equal partnership
joint venture was formed in
2007 to serve the fastgrowing
Indian high net worth
individual (HNI) client base,
leveraging Religare's local
knowledge and Macquarie's
global expertise. As of March
2013, the joint venture had
assets under management of
Rs 2,800 crore, servicing over
4,800 clients. After completion
of the transaction, the
joint venture will be rechristened
Religare Wealth
Management.
Banks to guarantee
foreign investments The
RBI has allowed banks to
stand guarantee on behalf of
non-residents acquiring shares
or convertible debentures of
an Indian company through
open offers or delisting or exit
offers without its prior
approval. The move, aimed at
attracting foreign investments,
allows banks authorised to
deal in foreign exchange to
issue guarantees on behalf of
persons, who are residents
outside India, for foreign
direct investment transac-
APPOINTMENTS
Anuj Agarwal, the former
chief financial officer of
Indonesia's PT Asuransi
Allianz, has taken over as
managing director and
officiating chief executive
officer of Bajaj Allianz.
TIE-UPS
Reliance Health Insurance
has inked a corporate
agency agreement with
Union Bank of India for
RBI cracks down on 0% EMI, 20:80 schemes The Reserve
Bank of India (RBI) has come down heavily on enticing
schemes across segments that short-change customers. The central
bank directed lenders to offer uniform interest rates and processing
fees on equated monthly instalment (EMI) credit card
schemes for retail products and told them to desist from offering
products with zero per cent interest. The RBI noted that interest
rate charged was camouflaged and passed on to customers as
processing fee by banks that offered zero per cent EMI schemes
on credit card outstanding for purchasing retail products. Earlier,
the RBI had asked banks to stop funding 20:80 schemes of real
estate companies as defaults by builders could affect credit profile
of borrowers and expose banks to higher non-performing assets.
Real estate companies had been offering such 20:80 schemes,
where builders agreed to pay interest on borrowers' loans for a
specific period, while buyers paid builders 20 per cent upfront and
banks disbursed the entire loan to builders through borrowers.
tions. However, the central
bank has clarified that
transactions should be in
compliance with the provisions
of the Securities and
Exchange Board of India
(Substantial Acquisition of
Shares and Takeover)
Regulations. Besides, the
distribution of its health
insurance products.
Air India has tied up with
SBI Cards to launch a cobranded
travel credit card.
AWARDS
HDFC Life has bagged the
National Award for
Excellence in Cost
Management in the category
of private service sector
(large) companies from the
Institute of Cost Accountants
of India.
guarantees given by banks
should be covered by counterguarantees
of banks of
international repute.
Rs 1.43-lakh crore
locked up in DRTs Over
42,000 cases are piled up
before the 33 Debt Recovery
Tribunals (DRTs) in the
country, locking up a
whopping Rs 1.43-lakh crore.
The cases are piling up mainly
because number of loan
recovery cases filed by banks
and financial institutions is
rapidly outstripping those
getting disposed of. According
to Finance Ministry data, from
April 2012 to March 2013,
banks and financial institutions
filed 14,666 cases in DRTs to
recover loans of Rs 48,037
crore. In the same period, the
tribunals resolved 9,816 cases,
including those carried over
from previous years,
aggregating Rs 18,692 crore.
Bankers complain that though
DRTs are supposed to
dispose of a case within six
months from the date of
receiving an application by a
bank or a financial institution,
in reality even the first
hearing happens after a year.
Wonga enters India by
buying Chennai firm
British loan provider Wonga is
on its way to tap into India's
expanding middle class in
need of short-term finance.
UK-based Wonga, known as
a pay-day lender due to its
strategy of offering high
interest rate loans largely to
customers in need of cash in
between their monthly pay
cheques, recently entered
India through an acquisition of
a 75 per cent stake in
Chennai-based Nahar Credits.
Nahar Credits is focused on
commercial loans to small
companies. But its existing
licence permits lending to
individuals, which will allow
Wonga to operate in the
Indian market.
Allahabad Bank steps up
retail loan biz Kolkataheadquartered
Allahabad
Bank has set up 40
centralised retail banking
boutiques in a bid to focus on
its retail credit business. The
40 outlets are in addition to
the 59 boutiques that allow
faster processing, appraisal
and sanction of retail loans.
The State-run bank has taken
these steps to speed up
sanction of housing loans
within six working days and
car or vehicle loans within 48
hours. The bank finances
commercial vehicles through
its All Bank Fleet Finance
Scheme, wherein loans above
Rs 2 crore are sanctioned.
Allahabad Bank has also
entered into a tie-up with the
country's major automobile
manufacturers to finance their
vehicles.
12 OCTOBER 2013 INDIA BUSINESS JOURNAL

﻿SAIL scouting for new
iron ore mines Steel
Authority of India (SAIL) is
scouting for new iron ore
mines in several States,
including Madhya Pradesh,
Chhattisgarh, Odisha and
Karnataka. The search by the
country's largest steel-maker
is aimed at ensuring regular
supplies of iron ore as it
pushes up its capacity by up
to 50 per cent to 21 mt by the
end of the current financial
year. The company, which
produced 13.4 mt of crude
steel in the last financial year,
currently meets its 21.48 mt
of ore through captive ore
mines. The 21-mt hot metal
production capacity, slated to
go on stream by March 2014,
will lead to over a 50-per cent
jump in iron ore requirement
for the company to about
34 mt.
BSNL, MTNL to get
Rs 11,000-cr refund A
Group of Ministers has
decided to refund Rs 11,000
crore that Bharat Sanchar
Nigam (BSNL) and
Mahanagar Telephone Nigam
(MTNL) paid to acquire
broadband spectrum in 2010.
APPOINTMENTS
D K Sarraf, the managing
director of ONGC Videsh,
will be joining ONGC as its
chairman and managing
director following
retirement of incumbent
Sudhir Vasudeva on
February 28, 2014.
TIE-UPS
Gujarat Gas Company
(GGCL) and Gujarat
State Petroleum
Corporation (GSPL) have
signed a memorandum of
understanding for a longterm
gas supply deal, under
which GSPC will supply
0.85 mscmd of gas to
IOC's Paradip refinery to be ready by year-end Indian
Oil Corporation's (IOC) Paradip refinery is likely to be commissioned
by the end of the current financial year. The Rs 30,000-
crore refinery project will be able to refine about 15 mt of heavy
crude oil with a high sulphur content. The State-owned oil company
has added that the Paradip project will enable it to cash in on
the opportunity to process cheaper varieties of crude oil. The commissioning
of the integrated crude oil handling facilities in Paradip
will facilitate the country's largest refiner to receive the entire
crude oil requirement of its Barauni, Haldia, Bongaingaon refineries,
along with that of the upcoming Paradip refinery, through
very large crude carriers and achieve significant cost reduction.
GGCL for 11 years and six
months.
National Textile Corporation
(NTC) and National
Handloom Development
Corporation (NHDC) have
signed a pact to promote
handloom products, with
NTC selling NHDC's
handloom products through
its network of 84 retail
stores.
Kolkata-headquartered
Damodar Valley Corporation
has tied up with
Infrastructure Leasing &
Financial Services to
promote two industrial parks
on its excess land in West
Bengal and Jharkhand.
BSNL and MTNL had to
match the price quoted by
private players during the
auction, but were given air
waves in an inferior spectrum
band of 2.5 ghz as against 2.3
ghz spectrum given to private
operators. The two Stateowned
companies has tried to
offer broadband services, but
could not succeed due to
multiple reasons, including
wrong choice of technology
and weak propagation of the
frequency band.
TNPL ties up funds for
speciality board unit
Tamil Nadu Newsprint and
Papers (TNPL) expects to
achieve financial closure for
its 2-lakh tonne packaging
board project by October. The
Rs 1,200-crore greenfield
plant, coming up near Tiruchi,
Tamil Nadu, will be funded
with 80 per cent debt and 20
per cent internal generation.
The company has called for
global tenders for 30-mw
power plant equipment, two
85-tonne boilers and board
machines. The project, set to
be completed by March 2016,
will add to TNPL's current
capacity of about 4 lakh
tonnes of production annually.
The plant will produce highmargin
speciality boards,
including white-line chip
board, folding box board and
cup stock, and boost the
company's growth.
Jaipur to host world's
largest solar project The
Heavy Industries Ministry is
setting up an ultra mega green
solar power project in
Rajasthan on 23,000 acres
close to Sambhar lake, about
75 km from Jaipur. The total
capacity of the project at
4,000 mw makes it the largest
solar-based power project in
the world. The first phase of
the project of 1,000 mw, likely
to be commissioned by 2016
at an estimated investment of
around Rs 7,500 crore, will
come up through a joint
venture company to be
formed with equity from
Bharat Heavy Electricals,
Solar Energy Corporation of
India and Power Grid
Corporation of India, among
others.
MTDC recreates Diwali
at Times Square
Maharashtra Tourism
Development Corporation
(MTDC) recently organised a
mega cultural event, Diwali at
Times Square, in New York.
Recreating a Diwali-like
atmosphere, the corporation
showcased heritage and
culture of Maharashtra in a
bid to tap major international
source markets and increase
tourist arrivals in the State.
More than 3.5 lakh people
attended the event, including
Maharashtra cultural
organisations from across the
USA, Canada and Mexico
and high net worth Indians
from medical and legal
fraternities. The event saw
dancers performing Lavani
and Tutari amid playing of
Dhol-Tasha. Besides,
recreation of the Govinda
festival, with human pyramids,
singer Shankar Mahadevan
entertained the crowd with his
musical troupe.
PUBLIC SECTOR
INDIA BUSINESS JOURNAL OCTOBER 2013 13

﻿SPOTLIGHT
SHRUTI VERMA KHARE
US-based retail giant Wal-
Mart Stores is optimistic
about growing its wholesale
cash-and-carry business in India. Six
years ago, the American retail giant
joined hands with Bharti Enterprises
to start Bharti Walmart to operate the
joint venture's cash-and-carry business
under the Best Price brand
name.
Walmart India, the Indian subsidiary
of Wal-Mart Stores, has stressed
that India is an important market for
it. Amid reports of the two partners
ending their partnership, the US
company adds that it continues to
study implications of the country's
new foreign direct investment (FDI)
policy on its business. "Walmart is
optimistic about growing our Best
Price wholesale cash and carry business
in India as well as future retail
investment opportunities that can be
made possible through a clear and
predictable FDI policy," opines a
Walmart India spokeswoman.
Wal-Mart Stores was one of the
players that had been asking for a relaxation
of FDI norms in the multibrand
retail sector before the sector
was opened up in September 2010.
At present, 100 per cent FDI is allowed
in single-brand retail, while
FDI in multi-brand retail is allowed
up to 49 per cent.
Stressing on the importance of
Indian operations in the company's
global portfolio, the Walmart India
spokeswoman adds: "We think India's
best days are ahead and we are excited
to be a part of this opportunity."
Commenting on the change in norms
for FDI in the retail sector, the
spokeswoman adds: "We appreciate
the continued efforts by the Indian
Government to clarify investment
conditions. Reform of this policy
will improve shopping options for
customers, provide new markets to
local suppliers and farmers and improve
supply chain infrastructure in
Uneasy ties
Bharti Enterprises and Walmart
operate cash-and-carry business
in India under Best Price brand.
Strained relations between Walmart India and Bharti
Enterprises raise serious doubts about their muchawaited
retail foray.
the country."
The government has relaxed
norms and issued clarifications for
FDI in multi-brand retail, making
foray of players in the retail segment
easier. The rules that have been
eased include diluting the mandatory
30 per cent local sourcing norms for
multi-brand retailers and permitting
States to include cities with population
of less than 10 lakh for allowing
multi-brand retailing.
In accordance with the new norms,
multi-brand retailers, like Wal-Mart
and Tesco, will have to source 30 per
cent of their products from small and
medium enterprises only at the time
of start of business. Besides, foreign
retailers will have to make the mandatory
$50 million (about Rs 300
crore) investment in back-end infrastructure
only at the first engagement.
Thereafter, the investment will
depend on the business needs. The
mandatory requirement is that foreign
retailers have to bring in a minimum
of $100 million (around
Rs 600 crore) capital for setting up
shops in the country.
Underlining the benefits of foreign
players operating in the retail
sector, the Walmart India spokeswoman
points out: "Modern retailers
worldwide bring about large-scale,
high-volume sourcing, coupled with
a strong technological edge and supply
chain efficiencies. These have a
direct positive impact on consumers
who benefit by getting a wide assortment
of quality goods at low prices.
Food safety, hygiene and quality are
value additions."
Living in denial
There are reports that Walmart India
and Bharti Enterprises are expected
to end their joint venture and that the
world's biggest retailer had begun
talks with other companies for front-
14 OCTOBER 2013 INDIA BUSINESS JOURNAL

﻿Wal-Mart's interest in Indian retail seems to be waning due to political
uncertainty.
end retail foray in India. The Enforcement
Directorate is probing
charges against Wal-Mart's investment
of $100 million in March 2010
in a company called Cedar Support
Services through compulsorily convertible
debentures (CCDs). Cedar,
through a 100 per cent subsidiary
Bharti Retail, operates front-end
retail stores under the brand name
Easy Day.
It has been alleged that Wal-Mart
entered the Indian multi-brand retail
sector through its investment in the
Bharti Group even before the retail
sector was opened up for foreign investment.
The reports suggested that
Walmart would not convert into equities
$100 million it had invested
in the Bharti Group in 2010 through
CCDs.
However, spokespersons of both
the companies declined to comment
on the issue. A Bharti Group spokesperson
refused to comment on the
issue saying: "As a policy, we do not
comment on market speculations."
The spokesperson also clarified: "We
are in compliance with India's FDI
guidelines and we have cooperated
with the government during this process.
The Central government has
sought information and clarification,
which have been provided by us."
Big questions
Meanwhile, troubles continue to
haunt Walmart India and Bharti Enterprises
even as both the companies
put on a brave face and deny any rift
between them. In June this year,
Walmart India was dealt a major blow
as its country head stepped down. Raj
Jain, who had joined Wal-Mart Stores
in 2006, was given charge the following
year to expand its retail business
in India, one of the world's last
Raj Jain: Sudden exit, unanswered
questions
big untapped markets.
For the past several months there
had been talk of Mr Jain's exit in the
wake of several controversies. Although
Mr Jain is credited with setting
up Walmart's wholesale cashand-carry
business, back-end services
and consulting businesses during
his seven-year stint, the Indian
operations have moved from one
controversy to another.
Earlier, last November, Bharti
Walmart had suspended its chief financial
officer and other executives
for alleged violations of the US antibribery
law. The suspension was a
result of Wal-Mart's internal inquiries
into bribery allegations in Brazil,
China and India, which followed
an earlier probe in Mexico. Problems
at Walmart India range from
not having the appropriate licences
required to sell different products to
not having permits in place when
building stores.
The government has also set up
one-man inquiry committee to probe
if Walmart India had made lobbyingrelated
payments in India. During
Mr Jain's deposition before the committee,
it had come to light that
Walmart's wholesale arm was deriving
nearly 40 per cent of its sales
from Bharti Retail, while the government
has allowed only 25 per cent
of sales to group companies.
Amid these issues, Wal-Mart does
not seem to be in a hurry to strike a
deal with the Bharti Group for the retail
foray in India. Political uncertainty,
with the general election
slated in the coming year, and the
condition of State-wise nods to FDI
in retailing are a major hurdle that is
keeping the US giant from rushing
through with the deal. Besides, the
ongoing investigations related to lobbying
and bribery charges have put
Wal-Mart on the back foot. As time
goes by, the partners' silence seems
to be sending a clearer message than
their official reactions.
INDIA BUSINESS JOURNAL OCTOBER 2013 15

﻿POLICY
Unintended gain
A controversial TRAI measure to limit advertisement
timing on TV channels may turn out to be a boon for
other media platforms.
KUMAR RAHUL
"Yes, other media - digital, print
and OOH - are most likely to
benefit from the TRAI move."
LARA BALSARA
ED, Madison World
Broadcast and telecommunication
regulator Telecom Regulatory
Authority of India's
(TRAI) move to cap advertising to 12
minutes per hour on television (TV)
channels may have drawn flak from
the broadcast industry. However, the
measure seems to be opening opportunities
for alternative media, such
as out-of-home (OOH) advertising,
and the sector may increase over two
folds in the next three years.
According to industry experts, the
OOH sector that has a turnover of
about Rs 2,000 crore may even touch
Rs 5,000 crore in the next two to
three years, benefiting from advertisers
channelling funds to platforms
other than TV. The OOH sector has
different formats of advertisements,
such as hoardings, bus shelters, gantry,
bridge panel, wall rap and public
utilities, for reaching out to consumers
when they are on the move.
OOH so good
"Yes, other media - digital, print and
OOH, in that order - are most likely
to benefit," opines Madison World
Executive Director Lara Balsara.
She, however, notes that despite being
an outstanding and effective medium,
OOH is being hindered by a
lack of measurement data and "also
the fact that advertisers cannot buy
with confidence leads to its underutilisation".
Expressing confidence on the potential
of OOH, Gaurav Suri, the marketing
head UTI Mutual Funds, points
out that advertisers will look towards
mediums and means to reach out to
consumers and connect more efficiently,
given the inflation and premium
rates in traditional advertising
platforms. "OOH, in that sense, allows
you to localise and customise
and with measurability coming in, it
would be an attractive option,"
adds Mr Suri.
Doubts linger
However, not all are enthused by
OOH. Anuradha Aggarwal, the senior
vice-president (brand & insights) of
Vodafone emphasises: "TV will still
remain the cheapest medium to reach
out to our consumer. There are often
data-related problems in the
OOH sector. Many times, data are not
accurate."
Moreover, there are other issues,
on which OOH key stakeholders -
media owners and agencies - are
grappling and that needs to be first
resolved before brands start looking
at investing more in them as a medium,
adds Ms Aggarwal. Agencies
and media owners have not invested
in new innovations, execution is very
labour-intensive and thus scaling up
is very difficult, she notes.
The OOH sector is grappling with
a common problem over a lack of data
of viewership and some other factors.
Mr Suri adds that for the OOH
sector to grow "both measurability
and quality of street furniture has to
improve and investments have to be
made to improve the OOH options".
Recently, companies have come
up claiming to provide scientific database
of media assets, helping
brands to plan and channel their funds
for the OOH sector. According to
Proof of Performance Data Service
Managing Director Harjaap Singh
Mann: "The only reason the sector
was not growing was a lack of accountability
and a lack of data measurement.
We have brought substantial
data of viewership and advertisers
would come now." Mr Mann
In another major development, a
rather positive one for a different
set of service providers,
telecom regulator TRAI has recommended
up to an 81 per cent decline
in reserve price for spectrum
auction compared with the amount
it had recommended earlier in
April 2012. The cut in the base
price for an upcoming auction is
significant as the two previous
spectrum sales drew lukewarm
response because of high reserve
price.
The telecommunication regulator
has recommended the government
for the base price of auction
of spectrum in 900 and 1,800 mhz
bands used by GSM players to offer
2G, which remained unsold after
two rounds of auctions in November
2012 and March 2013. It
16 OCTOBER 2013 INDIA BUSINESS JOURNAL

﻿claims that his firm has a database of
50,000 media assets. According to
him, after the TRAI cap on ad timing,
firms will come towards the
OOH sector and be assisted with scientific
data.
"We expect big companies, especially
from fast-moving consumer
goods and automobile segments, to
opt for the OOH as they may move
from TV to outdoor platforms after
getting good return on investment in
the OOH sector," he notes, adding
that his firm has collected video
analytics-based data through vehiclemounted
cameras. It captures real
videos, spanning more than 12,000
km every month and then information
is extracted according to a
client's requirement through algorithm.
The data are also offered to
"TV will still remain the
cheapest medium to reach out
to our consumer. There are
often data-related problems in
the OOH sector."
ANURADHA AGGARWAL
Senior V-P, Vodafone
TRAI slashes spectrum price
has suggested a pan-India reserve
price of Rs 1,496 crore per mhz in
the 1,800 band, down 37 per cent
from the base price set in the previous
auction. In the 900 mhz band, it
has recommended a reserve price of
Rs 288 crore per mhz for Delhi,
Rs 262 crore for Mumbai and
Rs 100 crore for Kolkata.
The regulator notes that there have
been dramatic changes in India's economic
situation and its prospects
since the time the last spectrum reserve
price was decided by the authority
earlier. "In all of a year, fundamentals
of the economy have deteriorated.
Consumer inflation remains
high and growth has stalled and
has fallen each successive quarter
over the last year. The country faces
an unsustainable current account
deficit combined with serious fiscal
constraints. Prospects of revival
are at least one to two years
away," the TRAI points out.
The TRAI has recommended that
before the upcoming auction, the
Department of Telecommunication
should come out with a clear
roadmap indicating the quantum of
spectrum that will be available in
future, along with timelines, so that
licensees, whose licences are due
for renewal in 2015-16, can take a
decision about bidding for spectrum
in the 1,800 mhz band.
"The only reason the sector was
not growing was a lack of
accountability. We have
brought substantial data of
viewership and advertisers
would come now."
HARJAAP SINGH MANN, MD,
Proof of Performance Data Service
brands, media owners and agencies
on a subscription-based model to
help monitor and plan their spends in
the OOH efficiently and deliver enhanced
return on investment.
Greater choice
Currently, there are 15 to 20 big and
small companies involved in the
OOH sector, which own or hire assets
as slots and ad space. "Normally,
in a month 8,000 to 10,000 advertisements
are coming into the sector,"
reveals Mr Mann, adding that the
advertisement is still depended on the
local economy of the place. These
slots are charged between Rs 10 lakh
and Rs 1 crore a year in metro cities,
depending on visibility and place.
As in Delhi and the National Capital
Region, real estate players are the
biggest advertisers, while in Mumbai,
the banking, financial services and insurance
(BFSI) sector dominates
OOH slots. In Bangalore, it is again
the BFSI combined with the automobile
sector. In Kochi, slots are populated
by jewelers, while Kanpur's slots
are used up by education and coaching
firms.
The TRAI's direction to limit advertisement
time on TV appears to be
too arbitrary. In a free-market
economy, the regulator should ensure
that there is justice and freeplay.
But it is beyond the jurisdiction of
the regulator to dictate terms of commercial
engagement as long as they
are reasonable and legal.
Meanwhile, however controversial
the TRAI's move may be, it will open
new avenues for advertisers, who often
end up paying exorbitantly to
broadcasters.
INDIA BUSINESS JOURNAL OCTOBER 2013 17

﻿DISINVESTMENT
Whither divestment?
Volatile markets make it tough for the government to
mop up targeted funds through its stake-sale
programme.
JOYEETA DEY
As expected, State-owned Life
Insurance Corporation of India
(LIC) has cornered a
lion's share of the government's
stake in its disinvestment
programme. The life insurance juggernaut
has purchased shares worth
about Rs 16,400 crore through the
Offer for Sale (OFS) route, accounting
for 49 per cent of the
money raised by the government
through stake sale.
The OFS or auction route
has yielded Rs 33,800 crore to
the exchequer through stake
sale in 11 companies since
March 2012, beginning with
oil major Oil and Natural Gas
Corporation (ONGC). LIC has
bought shares worth Rs 16,396
crore in these companies
during the auction, according
to official data.
The government uses the OFS
route, popularly known as the auction
route, to divest its stake in public
sector undertakings (PSUs) that
figure in top-100 companies according
to market capitalisation. So far,
it has divested stake in 11 PSUs
through this route.
LIC all the way
The data reveals that with the exception
of National Thermal Power Corporation
(NTPC) and National Mineral
Development Corporation
(NMDC), the country's largest insurer
has picked up over 50 per cent
of the shares put up by the government
for sale. In case of ONGC, LIC
has picked up over 40 crore shares
or 93 per cent of the 42.78 crore
shares sold at a price of Rs 304.25
apiece, including brokerage and Securities
Transaction Tax. It has
shelled out Rs 12,179 crore for buying
ONGC shares.
In the other major issues, such as
those of Steel Authority of India
(SAIL) and National Aluminium
Company (NALCO) in March, LIC
bought 50 per cent of the shares on
the block. While in SAIL it purchased
12.45 crore shares of 24.04 shares
Tough Target
LIC: Bailing out divestment
Rs 23,920 crore mopped up
in FY13 against disinvestment
target of Rs 30,000 crore
Divestment target for FY14
set at Rs 40,000 crore
Halfway through the year and
only Rs 1,325 crore raised
so far
on offer, in the case of NALCO, it
bought 7.22 crore shares of 15.69
crore shares put on the block.
In the case of the share sale of
Metals and Minerals Trading Corporation
of India (MMTC) in June, LIC
bought 4.81 crore shares of the 9.33
crore shares on offer, thereby investing
Rs 289 crore. The other
share sales, in which LIC has purchased
majority stakes included
Hindustan Copper (HCL), Rashtriya
Chemicals and Fertilisers, State
Trading Corporation (STC) and Indian
Tourism Development Corporation
(ITDC).
Big challenge
The government proposes to raise Rs
40,000 crore through disinvestment
in the current financial year. But halfway
through the year, it has realised
only Rs 1,325 crore through stake
sale in six PSUs - MMTC, HCL,
Neyveli Lignite, National Fertilisers,
STC and ITDC. In the last financial
year, the government had raised Rs
23,920 crore through disinvestment.
In the current financial year,
the government plans to offload
5 to 10 per cent stake in five
companies, including Indian
Oil Corporation (IOC), Engineers
India (EIL) and Bharat
Heavy Electricals (BHEL), to
achieve the disinvestment target
of Rs 40,000 crore. The
government has approved disinvestment
of 10 per cent stake
each in IOC, Hindustan Aeronautics,
Rashtriya Ispat Nigam and
EIL. It has also approved a
proposal of 5 per cent stake sale
in BHEL.
The government will be relying
heavily on selling a 5 per cent stake
or 31.58 crore shares in Coal India
(CIL) to meet its divestment target.
It plans to tap the auction route to
garner over Rs 8,000 crore to the exchequer
and has initiated the process
of appointment of merchant bankers.
The government currently holds 90
per cent stake in CIL.
But as the market turns choppy
amid high volatility, it will be quite a
challenge for the government to meet
its divestment target for the year. Perhaps,
LIC will be pressed into service
once again this year to fill up
the government's coffers.
18 OCTOBER 2013 INDIA BUSINESS JOURNAL

﻿

﻿CORPORATE REPORT
MUNISH SHEKHAVAT
As a part of its global ambitions,
Hero MotoCorp (for
merly Hero Honda Motors),
the country's largest two-wheeler
manufacturer plans to enter 50 new
markets by 2020. The automobile
company has set a target of 20 manufacturing
facilities across the globe
and an overall annual turnover of
Rs 60,000 crore. The company is
putting up six assembly lines spread
across three continents by 2014.
"We will be selling in 50-plus
countries by 2020. To top it all, I am
talking of an annual turnover of
Rs 60,000 crore," emphasises Hero
MotoCorp Managing Director and
CEO Pawan Munjal. In the financial
year ended March 31, 2013, the
company's turnover was a little over
Rs 23,500 crore.
Hero MotoCorp, which recently
reached a landmark by rolling out 5
crore bikes, is now eyeing the 10-
crore rollout mark. "I am now looking
ahead at the 100-million (10
crore) cumulative figure by 2020
with 20 manufacturing facilities
across the globe," adds Mr Munjal.
He reveals that the company has entered
various global markets with an
aim to sell around 10 lakh units
Hero At a Glance
Origin
1984
...................................................
Headquarters
New Delhi
...................................................
Business
Two-wheelers
...................................................
Facilities
Gurgaon, Daruhera (Haryana)
Haridwar (Uttarakhand)
...................................................
Capacity
70 lakh units/year
...................................................
Market share
38%
...................................................
Employees
5,800
...................................................
+
Turnover (FY13)
Rs 23,583 crore
Hero No.1
Hero MotoCorp draws up big plans to expand its global
presence and almost triple its turnover by 2020.
"We will be selling in 50-plus countries by 2020. To top it all,
I am talking of an annual turnover of Rs 60,000 crore."
PAWAN MUNJAL, MD & CEO, Hero MotoCorp
abroad by 2017. The company is also
aiming for around 10 per cent of its
total sales to come from export markets
by 2017.
Big plans
Elaborating on the company's plans,
Mr Munjal notes that by 2020, Hero
will have an annual production of 1.2
crore motorcycles and scooters every
year. This will come from 20 assembly
lines inside and outside the
country. For the financial year ended
March 31, 2013, its total production
was 62 lakh units. Currently, Hero
rolls out bikes from its three plants
located in Gurgaon, Daruhera and
Haridwar. Last year, the company had
announced that it would set up its
fourth plant in Neemrana, Rajasthan,
and fifth plant in Gujarat as a part of
a Rs 2,500-crore investment to hike
production and research and development
(R&D) capability.
In the short term, the company
will be launching brand Hero in ten
more international markets by the
end of this year. Hero plans to launch
12 new models in the next two quarters
to cater to customers during the
festive season and the period thereafter.
"In the next two quarters, we
plan to offer more than a dozen new
products to our customers. We are
now ready, we will be up and running
soon," adds Mr Munjal.
The new launches will be across
the entire product range of Hero
MotoCorp and, in tune with its launch
20 OCTOBER 2013 INDIA BUSINESS JOURNAL

﻿In Top Gear
Target 2020 to push turnover to
Rs 60,000 crore from
Rs 23,583 crore
Adding 17 more manufacturing
facilities by 2020 to the current
three
Increasing global footprint
across 50-plus countries by 2020
from the present five
Fourth and fifth plants coming
up in Rajasthan and Gujarat
respectively
Six new assembly lines across
three continents by 2014
Total two-wheeler rollout set at
10 crore by 2020 from the recent
5 crore
Hero has also initiated a new project, Leap 20, aimed at making the two-wheeler
manufacturer a leader in profit margin.
plans, the company has made a lot of
progress on its R&D front to deliver
new products. It has been doing a fair
amount of work, especially on frame
and chassis, on R&D at its facilities
in Daruhera and Gurgaon. "Never did
we get an opportunity to design an
engine. We have test-fired three engines
and this has been a huge reason
for excitement at Hero," discloses
Mr Munjal.
Despite the current slowdown,
Mr Munjal stresses that he is extremely
optimistic about the forthcoming
festive season. Hero has also
initiated a new project, Leap 20 and
it is about leadership in profits. The
company is not a leader in margins
today. It is working with McKinsey
in this regard and eyeing a 20 per
cent EBITDA (earnings before interest,
taxation, depreciation and amortisation)
margin in the next few years.
Global drive
The company, which recently forayed
into the African continent by launching
bikes in Kenya, is looking at foraying
into more new markets. Earlier,
its export market was restricted
to Colombia in Latin America and
neighbouring countries of Sri Lanka,
Bangladesh and Nepal. Between
January and March 2014, the company
is launching operations in some
more additional markets, some in
Africa, some in the Caribbean and
Central American countries.
In July, as a part of its global expansion
plans the company had announced
its foray into the African
continent with launch of its brand and
products in Kenya, where it had also
set up an assembly unit. The
company's operations are also slated
to commence in Burkina Faso and
Ivory Coast soon.
Munjal adds that the company is
delighted to see brand Hero making
its debut in the African continent with
the first launch in Kenya.
Hero has introduced a range of its
two-wheeler brands across categories,
including the entry-level segment
- Dawn - the deluxe segment -
Splendor Pro, Glamour and Hunk -
and the premium segment - Karizma
- in Kenya. The company is confident
of its products appealing to customers
across a wide price spectrum and
creating a new benchmark for mass
mobility in Kenya. "Indeed, our Africa
business is going to play a crucial
role in our plans of taking Hero
global," Mr Munjal points out.
Hero MotoCorp will soon launch
brand-building initiatives in the African
market with the English version
of the iconic Hero anthem, Hum
Main Hai Hero (There's a Hero in
each of us), which will be aired
across radio stations in Kenya.
"There will also be brand-specific
communication to establish Hero
products in the country," Mr Munjal
adds.
Goal 2020
The company's foray in Africa comes
close on the heels of its launch in
Central America, where it commenced
operations in Guatemala, El
Salvador and Honduras in May. Its
other international markets include
Sri Lanka, Bangladesh, Nepal and
Colombia.
Last month, Hero MotoCorp
picked up 49.2 per cent stake in USbased,
high-end, motorcycle-maker
Erik Buell Racing for about Rs 148
crore. The development comes more
than a year after the two companies
had entered into a design-and-technology
sourcing pact as Hero
MotoCorp looks to strengthen presence
in the global markets.
Hero MotoCorp has been seeking
global expansion after breaking up
with Japan's Honda in 2010. The
break-up ended their 26- year-old
relationship after the Indian partner
agreed to buy out its Japanese
partner's 26 per cent stake in Hero
Honda for Rs 3,841.83 crore. As
Hero MotoCorp revs up to zip
through new global markets, the
New Delhi-based auto major is bullish
of moving closer to its ambitious
2020 goal.
INDIA BUSINESS JOURNAL OCTOBER 2013 21

﻿CORPORATE REPORT
Robust run
With a smart choice of sectors and a reputation for
high-quality products, Technocraft Industries has
remained unscathed by the global economic slowdown.
AMIT BRAHMABHATT
"If the US economy remains
stable and continues to grow
at the current rate, we should
also be growing by about
30 per cent in the next three
years to reach a top line of
Rs 1,000 crore."
NAVNEET SARAF
COO, Technocraft Industries
Technocraft Industries has literally
kept economic slow
down at bay. Despite the
slump, the Mumbai-based engineering
conglomerate has tapped diversified
sectors and grown exponentially.
The mood at its six manufacturing
facilities - five in Murbad near
Mumbai and one near Nanjing, China
- is overtly buoyant with hardly any
trace of the downturn.
"We were hit by the economic
downturn of 2008-09. But since then,
business is booming and the company
is on a consistent growth path," notes
Navneet Saraf, the young and dashing
chief operating officer (COO) of
Technocraft. The 36-year-old executive
of the nearly Rs 650-crore engineering
company adds that gradual
recovery in North America and an upturn
in construction and oil and gas
sectors bode well for Technocraft.
A cleverly thought-out diversification
plan has kept the engineering
company ticking even in these tough
times. Technocraft, which controls a
35 per cent share of the global drum
closure market, is the world's second-largest
manufacturer of the vital
part that caps oil drums. With 50
lakh sets of drum closures and accessories
per month, the company is
second only to the US-based Grief,
which is also the world's largest drum
manufacturer. Drum closures apart,
Technocraft has interests in sectors
as varied as scaffolding systems, textile
and engineering services.
The engineering company's
growth has been nothing short of a
miracle. Even as the world economy
is struggling, Technocraft, which derives
a whopping 95 per cent of its
total revenues from global operations,
has turned in good profits, year
after year. A strong reputation for
high quality and precision has enabled
the company to export its highend
products and services to over 60
countries across the globe and keep
the slowdown at a safe distance.
Well-laid plans
In 1972, two technocrats, freshly out
of IIT-Bombay, laid a strong foundation
for Technocraft. "My uncle S K
Saraf and my father S M Saraf started
Technocraft to manufacture highprecision
and sophisticated drum
closure products," adds Mr Saraf,
who joined the family busines at a
young age of 22 after completing
his mechanical engineering from
the UK.
The young Saraf brothers seem to
have zeroed in on the right product
and the right sector. For four decades
- right through the oil shocks of
1970s and 1990s, a decade of economic
boom in the new millennium
and economic crisis since 2008 - the
petroleum sector continued to grow.
During the first two decades since
inception, the engineering company
focused solely on drum closures and
built its name in the international oil
market. Then in the early 1990s, a
new opportunity emerged. A sick
steel tube mill in Murbad, close to
Technocraft's drum closure plant, was
put on the block. The Sarafs, keen on
diversifying their business, grabbed
the opportunity and bought the unit.
The new unit restarted production
of steel tubes, which were galvanised
and exported to the UK and West
Europe. In 2002, there was a sudden
spurt in the price of steel, which rendered
steel tube production a lowreturn
venture. The company soon
went in for forward integration by
foraying into scaffolding systems to
retain its profit margin. The Saraf
brothers were aware that scaffolding
in India, with no entry barrier, was
fiercely competitive with a large
number of unorganised players. So,
they consciously decided to position
Technocraft as a serious player in the
Western markets, which are very particular
about safety standards.
With stress on safety and quality,
Technocraft is today one of the very
few Indian companies to be a certified
player in the lucrative markets
of North America and Europe. The
company's plants, one each in
Murbad and Nanjing - the Chinese
plant was set up 2011 - churn out
2,500 tonnes of scaffolding systems
and accessories each month, making
it one among the top-five scaffolding
systems manufacturers in
the world.
22 OCTOBER 2013 INDIA BUSINESS JOURNAL

﻿Constantly on the lookout for new
growth opportunities, the Sarafs
turned their gaze to textile in the
mid-1990s. Over the years,
Technocraft has grown into a major
integrated textile player with 61,000
spindles at its Murbad mill spinning
out quality yarn. The company has
also set up a fabric and garment unit
near its yarn mill, which makes T-
shirts. Besides, a 15-mw, coal-based,
captive power plant in Murbad runs
its five plants in the industrial town.
The new millennium, coinciding
with the dawn of information technology
(IT), provided another breakthrough
to Technocraft. "Amid the IT
boom, we did not want to get into IT
services. Instead, we leveraged on our
core engineering expertise and forayed
into engineering services
through Technosoft Engineering
Projects, a wholly-owned subsidiary
of Technocraft," explains Mr Saraf.
With 400 engineers working on a
sprawling 75,000-sq ft plot in
Thane, Technosoft has carved a niche
for itself in the engineering
services segment.
The company has expanded its engineering
services by making two
global acquisitions. It acquired Milwaukee,
US-based Impact Engineering
- an integrated engineering services
company - in 2006 and bought
Calgary, Canada-based Swift Engineering
- an engineering, procurement
and construction management
services provider to oil and gas industry
- this year.
Bullish bets
"The oil and gas sector offers a huge
opportunity. The booming petroleum
sector in the US and Canada augurs
well for our drum closure and engineering
service businesses," reveals
the dynamic Technocraft COO, who
looks after the company's overseas
operations apart from scaffolding
and engineering services. The company
also sees the oil and gas sector
pushing its scaffolding operations,
with rising demand for scaffolds
Technocraft, the world’s second largest drum closure producer, sees scaffolding
and engineering services driving its future growth.
Technocraft A Snapshot
Technocraft's China facility
Origin
1972
...................................................
Headquarters
Mumbai
...................................................
Products
Drum closure, scaffolding,
textile & engineering services
...................................................
Manufacturing facilities
5 -Murbad, India
1-Nanjing, China
...................................................
Manufacturing caapcity
Drum closure: 50 lakh sets/month
Scaffolding: 2,500 tonnes/month
Yarn: 61,000 spindles
...................................................
Employees
5,000
...................................................
+
Group Revenue (FY13)
Rs 808 crore
from petroleum exploration and production
contractors.
Shale gas, especially in North
America, is adding a new dimension
to the energy sector and Technocraft
is readying to tap it. The company's
recent acquisition, Swift Engineering,
is gearing up to cash in on the
shale gas boom. "India too offers
bright, long-term prospects with
substantial shale gas reserves as well
as the government's decision to
double the price of gas from next
year," adds Mr Saraf. The company,
which is setting up a 5-mw solar
power plant near Solapur, is also betting
big on the power sector.
Meanwhile, the company is drawing
up expansion plans in all its four
divisions - drum closure, scaffolding,
textile and engineering services.
It recently introduced plastic drum
closures to keep abreast with the
changes in the oil drum market. The
company has also started making aluminium
scaffolding systems, which
are lighter than steel systems and in
greater demand. The scaffolding division
is making metal towers used
in power transmission and telecommunication.
Technocraft is adding
capacity in its yarn, fabric and garment
operations, while Technosoft is
building a strong platform to fuel
growth in the oil and gas vertical.
"The next five years should see
decent growth for the company. If the
US economy remains stable and continues
to grow at the current rate, we
should also be growing by about 30
per cent in the next three years to
reach a top line of Rs 1,000 crore,"
discloses Mr Saraf. Technocraft's
smart choice of sectors and products
could make it easy to hit the target
well in time.
INDIA BUSINESS JOURNAL OCTOBER 2013 23

﻿CORPORATE FEATURE
Giant strides
From agriculture and animal husbandry,
Mahesh Motewar has grown Samruddha Jeevan into
a multi-crore pan-India conglomerate.
IBJ BUREAU
Few business conglomerates
may match the blistering pace
of growth of the Samruddha
Jeevan Parivar. In a short span of a
decade, the Pune-based company has
successfully diversified into uncharted
territories.
After consolidating its rural-centric
business, Samruddha Jeevan has
entered new businesses, which have
boosted its balance sheet exponentially.
From agriculture and animal
husbandry, Samruddha Jeevan has
branched into real estate, hospitality,
education, media, healthcare, IT and
milk products with a unique business
model that is grounded in the
grassroots. Moving beyond the
boundaries of Maharashtra,
Samruddha Jeevan is today a pan-India
conglomerate with 350 customer
service centres catering to clients
across 22 States.
"A well-trained force of more than
Mahesh Motewar: Man on the move
4 lakh independent marketing executives,
reaching out to about 16 lakh
customers, is the backbone of the
group's unprecedented growth,"
stresses Mahesh Motewar, the
founder chairman and managing director
(CMD) of the Samruddha
Jeevan Parivar. The 44-year-old, dynamic
Samruddha Jeevan chief has
pushed limits and diversified his
group's operations at a breathtaking
pace.
With an aim to cash in on its vast
land bank, the company entered the
real estate sector two years ago. Its
Though Mr Motewar has
successfully diversified into
businesses as varied as real
estate, hospitality and
education, his most
audacious move has been in
the media sector with
acquisition of a Hindi news
channel and a Marathi
entertainment channel.
realty arm Samruddha Jeevan Construction
is in the final stages of
completion of its maiden residential
apartments, Samruddha Jeevan Park
and Samruddha Jeevan Sankul on the
Katraj-Kondhwa Road near Pune.
Besides, the realty company is
planning to develop a 150-flat residential
apartment in Saswad, a 200-
apartment residential complex in
Katraj, both near Pune, and a 1,200-
flat property in Valsad, Gujarat. The
company recently bought 27 acres
near Satara and it is also building
plush bungalows on a nine-acre plot
in Malwali near hill station Lonavala.
There are also plans to expand
Samruddha Jeevan's realty operations
across the country in the next few
years.
Two years ago, Mr Motewar's immense
energies were directed towards
hospitality. The group entered
the hospitality sector two years ago
by acquiring a 32-room resort,
Samruddha Jeevan Orchard, spread
across 1.25 lakh sq ft on the Pune-
Satara Road. It further strengthened
its business in the sector by taking
over Le Royale, a 110-room, fourstar
luxury hotel, in the IT hub
Hinjewadi near Pune.
Mr Motewar has also made his
presence in the education sector. The
Siddhant Group of Institutes, which
Mr Motewar had acquired last year,
is a reputed professional institute,
spread across sprawling 22 acres in
Sudumbare near Pune, offering engineering,
business management
and almost all major professional
degrees.
Leveraging its grassroots network,
the conglomerate has set up
Samruddha Jeevan Multi-State Multi-
Purpose Cooperative Society in 14
States, including Maharashtra,
Gujarat, Karnataka and Madhya
Pradesh. "Our aim is to provide
timely credit at affordable rates to
farmers and small entrepreneurs in
unbanked parts of the country,"
stresses Mr Motewar.
24 OCTOBER 2013 INDIA BUSINESS JOURNAL

﻿Perhaps the most audacious move
by the Samruddha Jeevan is its recent
foray into the media sector.
Samruddha Jeevan recently acquired
a Hindi news channel and a Marathi
entertainment channel, apart from
launching a Hindi monthly magazine,
. The group also publishes
a Marathi news weekly, .
"The group is scouting for acquisition
of local TV channels across
Madhya Pradesh, Chhattisgarh, Bihar,
Uttar Pradesh and Karnataka," reveals
Mr Motewar.
Focused approach
The success of Samruddha Jeevan
Parivar's diverse operations can be
traced back to Samruddha Jeevan
Foods, a Pune-based farming company
started by Mr Motewar over a
decade ago. Way back in 2000, armed
with a diploma in civil engineering,
young Motewar acquired 105 acres
in Malthan, near Pune, grew vegetables,
reared cattle and began trading
in vegetables and milk. But he was
quick to realise that the business
was not viable, given its small size
and scale.
Quick to identify the pitfalls of
Indian agriculture, Mr Motewar
thought of orienting his agricultural
and animal husbandry business in an
organised manner to reach economies
of scale. Thus was born
Samruddha Jeevan Foods in 2002.
Through its unique business model,
based on the spirit of cooperatives,
the new company gradually began
making waves in and around Pune.
Samruddha Jeevan struck alliances
with small, land-holding farmers,
provided them modern farming techniques
and equipment and, in return,
shared the profit. Besides, the company
also provided farmers healthy
buffaloes and imparted scientific
processes of rearing them. The company
has set up 32 milk processing
plants across the country to process
the milk collected from these farmers.
Through contract farming and
cattle rearing, Samruddha Jeevan
From a humble beginning, Samruddha Jeevan is today a pan-India organisation
with 350 customer service centres catering to clients across 22 States.
Samruddha Jeevan:
A Fact File
Origin
2002
...................................................
Promoter
Mahesh Motewar
...................................................
Headquarters
Pune
...................................................
Business
Agriculture, animal husbandry,
hospitality, realty, education,
media, healthcare, IT and milk
& milk products
grew even as its farmers prospered.
"As a farmer's son, I always wanted
to do something different for farmers.
So, I started animal husbandry and
livestock business and grew along
with the farmers. Today, we are taking
this growth to higher levels," adds
Mr Motewar, a vegetarian and ardent
devotee of Lord Dattatreya. The
Samruddha Jeevan is consolidating
its diverse operations to enter the
big league.
It also launched an ambitious
project, Samruddha Kisan Yojana, last
year. The programme aims at further
strengthening its contract farming
and cattle rearing activities across the
country in an organised manner. The
project rolled out across
Maharashtra, Gujarat, Karnataka,
Rajasthan and Madhya Pradesh, has
built a strong base of farmers across
these States and has provided them
with a buffalo each.
Corporate social responsibility
(CSR) is not a mere lip service, but
an article of faith for the village-centric
business conglomerate. The
group's CSR initiatives such as group
marriage ceremonies, financial assistance
to families of martyrs and
the needy, education and healthcare
facilities are undertaken by
Samruddha Jeevan Foundation. The
foundation is known for organising
blood donation camps all over the
country and has many records to
its credit.
No wonder, the Samruddha Jeevan
CMD was recently hailed as one of
the upcoming powerful business
leaders of Asia in an award ceremony
held in Dubai. Despite huge successes,
Mr Motewar continues to
remain grounded and maintains a very
low profile. "All our plans are directed
at changing the dynamics of
the rural economy," he notes. As
Samruddha Jeevan stokes a silent
revolution across the country's hinterlands,
Mr Motewar's actions continue
to speak louder than his words.
INDIA BUSINESS JOURNAL OCTOBER 2013 25

﻿HOUSING
Easing terms
The government mulls changes in its FDI policy to woo
foreign investments into the housing sector.
RAJESH RAI
After relaxing FDI norms in as
many as 12 sectors, includ
ing telecom, tea, petroleum
and natural gas, the government has
started consultation for easing foreign
investment norms in the housing
sector.
The proposal to ease the FDI
guidelines for the sector was mooted
by the Ministry of Housing and Urban
Poverty Alleviation. The Department
of Industrial Policy and Promotion
(DIPP) has received the housing
ministry's proposal and is looking
at it favourably, according to a
DIPP official.
The ministry has asked for relaxation
in provisions, including easing
the three-year, lock-in period for FDI
in housing and townships. It has suggested
that the minimum
capitalisation (investment) should be
$5 million (about Rs 32 crore) instead
of the present $10 million
(around Rs 64 crore) for whollyowned
subsidiaries. It has also called
for a cut in the minimum built-up area
of 50,000 sq m in case of development
projects to 20,000 sq m of carpet
area.
According to the current FDI
policy, the lock-in period of three
years applies to every tranche of investment
brought in by a foreign
player from the date of receipt or
from the date of 'completion' of
minimum capitalisation, whichever is
later. The main objective of relaxing
the provisions is to attract more
FDI and provide houses at affordable
prices to the people," the official
adds.
Tweaking norms
Between April 2000 and May 2013,
the domestic construction development
segment, including townships,
housing and built-up infrastructure,
received FDI worth $22.16 billion
(over Rs 1,40,000 crore) or 11 per
cent of the total FDI attracted by India
during the period. The Press Note
2 (2005) of the DIPP allows FDI up
to 100 per cent in townships with
conditions.
The DIPP, which deals with FDIrelated
matter, issues provisions in
the form of Press Notes or consolidated
circulars. Although 100 per
cent FDI is allowed in townships,
housing and built-up infrastructure
and construction development,
the government has imposed many
conditions.
Big push
The government is also in the process
of providing a big boost to the
housing sector. The Real Estate
Regulatory Bill, which could not be
passed during the monsoon session
of the Parliament, is expected to pave
the way for establishment of a regulatory
authority to ensure accountability,
fair practice and fast-track
dispute resolution.
According to experts, there is an
estimated demand of 1.5 crore
homes for low-income customers,
with a monthly household income of
Rs 10,000 to Rs 25,000, who can
afford privately-built formal housing
costing Rs 4-10 lakh without any
government aid. This estimated demand
translates into an opportunity
of Rs 9,00,000 crore for developers
and Rs 7,00,000 crore for housing
finance companies.
The government is planning to invest
around Rs 50,000 crore in the
affordable housing segment in the
next three years, supplemented by an
equal amount of money from the
banking sector and the State governments.
The segment is set to see a
mobilisation of over Rs 1,00,000
crore in the next few years. The action
at the bottom of pyramid, in addition
to the moves to woo foreign
investors, is set to breathe new life
into the housing sector.
26 OCTOBER 2013 INDIA BUSINESS JOURNAL

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﻿COVER STORY
IBJ RESEARCH BUREAU
These are testing times for
Indian banks. A tottering
economy is taking a
heavy toll on the almost
Rs 55,00,000-crore
banking industry. As the country's
Gross Domestic Product (GDP)
growth slowed by a decade low of 5
per cent in 2012-13, lenders are staring
at a lower loan offtake, rising bad
assets and depleting profit margins.
Gross credit of scheduled commercial
banks rose by 15.1 per cent
in 2012-13 compared with 17.6 per
cent growth in the year-ago period
as businesses shelved projects amid
falling demand. "The growth outlook
looks very slow and modest. In commercial
lending sector, the pipeline
is almost dry. So, we are trying to
grow in consumer finance sector,
particularly on home and car loans,"
notes State Bank of India (SBI)
Chairman Pratip Chaudhury.
The domestic banking sector,
which emerged largely unscathed
from the global financial meltdown
of 2008, is also facing the heat of
non-performing assets (NPAs) with
rising default from borrowers. According
to a study by
NPAsource.com, a portal that tracks
bad loans, 39 listed banks' gross
NPAs mounted by 36.1 per cent to
Rs 1,79,431 crore as of March 2013.
During the same period, their net
NPAs shot up by 51.2 per cent to
Rs 92,825 crore. Banks that have
higher exposure to manufacturing,
mining and key infrastructure sectors,
like power and telecom, have
taken a big hit as these sectors reel
under the impact of the slowdown as
well as many regulatory hurdles.
Think-tank CRISIL warns that rising
delinquencies and higher cost of
funds will result in the banking
system's bad assets jumping from
3.3 per cent in March 2013 to 4 per
cent by March 2014.
As banks wade through bad loans,
Slump-hit Indian banks must scale up operations
and redesign business models to fund vast
unbanked hinterlands and revive growth.
they have to contend with rising interest
rates even as borrowings taper.
In its long-drawn battle against persistent
inflation, the Reserve Bank of
India (RBI) has tightened its monetary
policy, leading to a sharp rise
in cost of funds. The Wholesale
Price Index-based inflation, which
rose by 6.1 per cent in August, is
mainly being driven by high food and
fuel inflation. With prices of food as
well as imported oil, gas and coal
likely to rule high in coming months,
worry lines on bankers' foreheads are
deepening by the day.
Meanwhile, the Basel-III norms,
which will be implemented in the
country in phases from April 2013
to March 2018, will mandate domestic
banks to raise an additional capital
of about Rs 5,00,000 crore. The
global banking guidelines, aimed at
capital adequacy - maintaining a certain
amount of capital against loans
advanced as a safeguard against bad
loans - and stringent risk manage-
28 OCTOBER 2013 INDIA BUSINESS JOURNAL

﻿Banking in Numbers
26
PUBLIC SECTOR BANKS
...........................................................................
22
PRIVATE SECTOR BANKS
...........................................................................
43
FOREIGN BANKS
...........................................................................
1,05,078
BRANCHES
...........................................................................
Rs 71,13,025 crore
TOTAL DEPOSITS
Rs 54,27,173 crore
TOTAL LOANS
...........................................................................
3.3%
GROSS NPAs
As on Septemebr 6, 2013
Source: RBI
ment norms, will further put pressure
on lenders as they struggle to stay
afloat in these troubled times.
The capital adequacy norms will
strain the banking industry, which is
dominated by public sector banks,
accounting for more than 70 per cent
of the country's banking sector. The
government, which owns the 26 public
sector banks, has amended the
provisions of the National Investment
Fund, according to which the
proceeds of disinvestment of stakes
in public sector undertakings will be
utilised to recapitalise banks.
However, the government will find
it difficult to fund banks in the future
as it battles to curtail its ballooning
fiscal deficit. The challenge posed
by capital adequacy norms gets complicated
as banks are expected to bear
a considerable amount of the mindnumbing
over Rs 50,00,000-crore
infrastructure funding target in the
12th Plan period (2012-17).
Reality check
With a little more than 1,00,000
branches of 26 public sector, 22 private
sector and 43 foreign banks operating
in India, the country appears
like a gigantic banking hub. However,
the numbers present a grim picture
when they are held up against the
country's huge population. The stark
truth is that only 55 per cent of the
population has access to banking services.
Rural areas are particularly
impacted as most of the branches are
concentrated in urban and semi-urban
regions.
Despite over two decades of reforms
and reasonably-high economic
growth, India is among the most under-banked
nations in the world. This
fact particularly stands out against a
few basic banking parameters, such
as a low penetration of banking services.
A case in point is India's loanto-GDP
ratio, which is just 75 per
cent, whereas it is 146 per cent for
China, 214 per cent for the UK and
233 per cent for the USA. Besides, a
World Bank report points out that India
has around 3.5 ATMs (automated
teller machines) and less than seven
bank branches per 1,00,000 people
as compared with the OECD
(Organisation for Economic Cooperation
and Development - a grouping
of 34 developed countries),
where there are nearly 30 branches
and 90 ATMs per 1,00,000 people.
The government is trying to correct
this imbalance through a number
of measures, which broadly come
under the ambit of financial inclusion.
In 2005, the RBI began laying
stress on financial inclusion to increase
the banking outreach across
the country's vast hinterlands. Since
then, introduction of no-frill ac-
Raghuram Rajan
Governor, RBI
"The RBI will issue more
licences for new banks and
make it easier for banks to
open branches across the
country."
counts or basic savings accounts
(providing zero-balance basic banking
facilities, along with ATM-cumdebit
cards without any extra charge),
opening of ultra-small branches in
villages, relaxation of know-yourcustomer
norms and appointment of
banking correspondents or BCs
(banks' agents that facilitate banking
transactions in remote, unbanked villages)
have all been trying to achieve
Challenges Galore
No banking access for about
45% of population
No-frill accounts and BCs
unviable due to very low
number of transactions
Only two banks in global-100
bank ranking
Low credit offtake and rising
bad loans amid economic
slowdown
Inflation-triggered high rates
pushing up cost of funds
Rs 5,00,000 crore additional
capital needed on account of
Basel-III norms
INDIA BUSINESS JOURNAL OCTOBER 2013 29

﻿COVER STORY
Only two banks - SBI and ICICI Bank - figure in the list of top-100 global banks.
the central bank's objective of facilitating
banking transactions in each of
the country's 6,00,000 villages.
In fact, financial inclusion, which
is both an opportunity as well as a
challenge, provides banking access
to a large section of the poor, who
are usually left at the mercy of usurious
moneylenders. Besides, it also
provides bankers an opportunity to
broad-base their operations and tap
the vast potential at the bottom of the
pyramid. No wonder, banks have
stepped up their efforts towards financial
inclusion.
With 15 crore basic savings accounts
and a spurt in number of BCs
from around 34,000 in March 2010
to more than 2,20,000 in March
2013, the RBI's ambitious plan appears
to be gaining traction. However,
there is still a long way to go.
Extremely-low number and amount
of transactions per account opened
under the plan are adversely impact-
Growth in Stark Contrast
Though the banking sector has grown tremendously in the past two decades,
the growth in rural reach is abysmal.
Branches (Nos)
Year 1994
Year2013
35,349
11,890
8,745
5,839
61,803
1,05,078
28,180
19,695 18,130
39,073
RURAL
SEMI-URBAN URBAN METRO
TOTAL
.........................................................................................................................................................................................
Credit (Rs crore)
Year 1994
Year2012
30,863
26,486
36,175
82,367
1,75,891
3,80,518
48,03,267
4,59,861 7,81,512
31,81,376
RURAL SEMI-URBAN URBAN
METRO
TOTAL
.........................................................................................................................................................................................
Deposit (Rs crore)
Year 1994
Year2012
49,331
63,035
74,249
1,37,361
3,23,977
5,73,186
RURAL
8,42,545
SEMI-URBAN
12,72,592
URBAN
33,89,921
METRO
TOTAL
60,78,243
Source: RBI
30 OCTOBER 2013 INDIA BUSINESS JOURNAL

﻿ing the viability of financial inclusion
efforts. Moreover, a joint survey
by MicroSave - a financial inclusion
consulting firm - and the RBI
College of Agricultural Banking
throws up disturbing details. The
2012 study shows that BCs' remuneration
of less than Rs 3,000 per
month leaves them dissatisfied with
K C Chakrabarti
Deputy Governor, RBI
Skewed Deployment of Credit
Growth in credit remaind stable for medium and large Industries, but it
saw a major decline in two most important sectors, agriculture and SSIs.
AGICULTURE + SSI
YEAR AMOUNT RS CRORE % OF TOTAL BANK CREDIT
1994 43,825 30.03
2013 8,74,262 17.95
MEDIUM & LARGE INDUSTRIES
YEAR AMOUNT RS CRORE % OF TOTAL BANK CREDIT
1994 57,865 39.65
2013 19,45,831 39.96
"Significant opportunities lie
ahead for our banks to
leverage on the three
components - technology,
processes and people -to
attain true banking
productivity and efficiency."
an unviable venture. Besides, it also
raises troubling questions over the
efficacy of most of the BCs and the
quality of service provided by them.
Meanwhile, the government's ambitious
Direct Benefit Transfer
(DBT) programme, linked to the
Aadhaar card, is expected to provide
a shot in the arm for the banking industry.
The DBT programme, which
aims at transferring the government's
cash subsidies under its various social
welfare schemes directly into
the bank accounts of beneficiaries,
has led to bankers scrambling to put
up banking infrastructure across faroff
villages and remote regions of the
country.
Financial inclusion, which was
mandated to public sector banks, is
gradually moving into the realm of
private banks too. In fact, the RBI's
guidelines for new banking licences,
which will be awarded early next
year, make participation in the financial
inclusion exercise a must for
new banks.
Paradigm shifts
Meanwhile, all eyes are on the RBI
as it heads into the final stage of
awarding new bank licences next
year. Over the past two decades, it has
licensed 12 banks in the private sector
in two phases - 10 in 1993, coinciding
with the economic
liberalisation, Kotak Mahindra Bank
in 2003 and Yes Bank in 2004.
After eight long years, another set
of players will soon be joining the
banking industry. Leading non-banking
finance companies - including
LIC Housing Finance, Aditya Birla
Nuvo, Reliance Capital, Bajaj Finserv
- corporate houses - such as Tata Sons
and Mahindra & Mahindra - and other
organisations - like the Department
of Posts and Bandhan Financial Services
- are among the 26 applicants
seeking the RBI's permission to start
banking operations. "The Indian banking
industry has always been full of
competition and there is enough
room for growth. When new players
come in, there are some disruptive
Minuscule number and amount of transactions and dissatisfied BCs are impeding
the progress of financial inclusion.
INDIA BUSINESS JOURNAL OCTOBER 2013 31

﻿COVER STRAIGHT STORY TALK
Pratip Chaudhury
Chairman, SBI
Chanda Kochhar
MD & CEO, ICICI Bank
"The growth outlook looks very "The Indian banking industry
Quite a large
slow and
number
modest.
of road
In
likely to be built within two months
has always been full of
commercial blocks lending greet sector, Oscar the will be fair-weather competition roads and and there not allweather
enough roads. room for growth."
is
Fernandes, pipeline the is almost new minister dry."
for road transport and highways. How has been the going so far
Many major highway projects have since you took charge of the highways
ministry?
come to a grinding halt, thanks to issues
related to land acquisition, en-
I have travelled to across most
Dipping Margins
vironmental and other clearances.
Net Interest Gross Income toparts Net of the Profit country to after assuming
As if these hurdles were not
Margin Avg. Assets charge Avg. of my Assets ministry. I have been
enough, the minister had to face taking stock of roads that have been
(%) (%) (%)
rough weather literally when he took completed and those where work is
charge of his office in 4.68 mid-June. still going on. I am regularly meeting
all the stakeholders in the high-
3.30
Unprecedented rains in Uttarakhand
3.89
just two days 2.79 before Mr Fernandes
1.02
ways sector, 0.37 from Mumbai to Bangalore
and Tamil Nadu to Kerala. I
assumed office wreaked havoc in the
hill State, 1992 affecting 2013 thousands 1992 2013 of
1992 2013
people and damaging many arterial
"UNLESS 60 PER CENT Source: OF RBI
highways and roads. Mr Fernandes
practices, but that is part of the business,"
reasons out ICICI Bank Man-
THE LAND ACQUISITION IS
talks about ongoing large-scale repair
and reconstruction of CANNOT START WORK
NOT New COMPLETE, Strategies DEVELOPERS
aging
Uttarakhand's
Director
roads
and
and
CEO
issues
Chanda
before Need
BECAUSE
for more
FINANCIAL
new banks
Kochhar. the highway sector in an exclusive
with licences
INSTITUTIONS
issued
regularly
interview The focus with has Megha also turned Manchanda. to new WILL NOT LEND MONEY."
RBI Governor Raghuram Rajan, who Leveraging game-changing
What is the situation of roads
took charge last month. Addressing opportunities of DBT and
and highways in flood-ravaged
have been interacting with them,
his first news conference as the central
I had bank a feel chief, of the Mr tragedy Rajan in towards Devising addressing economically-
them.
financial inclusion
Uttarakhand?
hearing their concerns and working
emphasised: "The RBI will issue viable business models
Uttarakhand and also interacted with What are their concerns?
more the Border licences Roads for Organisation. new banks, make Restoration
easier work for banks has started, to open but branches there the stakeholders innovation and revolve newaround land
Some Cashing of the in common on product concerns of
it
across are stretches the country where the and entire gradually road acquisition technologies and regulatory approvals.
lower has been the washed percentage out and of we assets have that to Unless Tailoring 60 per solutions cent of the suitable land acquisition
for low-income is not complete, groupsdevelop-
curities." one or two The months. former By chief September, econoers
cannot Consolidation start work to because attain finan-
banks build new must roads. hold This in government may beyond semist
we will of be the able International to restore connectivity
to seems Kedarnath. to be The making roads the that right are Last year, not too many bidders
Monetary cial economies institutions will of scale not lend and money. size
Fund came
noises and setting the right priorities
for the banking sector.
Meanwhile, global consultancy
firms are bullish about the Indian
banking sector. Last year, McKinsey
& Company forecast that four to five
Indian banks would enter the global,
top-20, market capitalisation club by
2020. The consulting firm adds that
the Indian banking sector's revenue
will grow five-fold from $50 billion
(about Rs 3,50,000 crore) to $250
billion (around Rs 15,00,000 crore)
by 2020, contributing more than 12
per
OSCAR
cent to Asia's
FERNANDES
total banking revenue
growth. A KPMG-CII report,
unveiled early this year, too speaks
of Indian banks in glowing terms. The
forward for projects because of economic
slowdown. The present norms
report predicts that the sector is expected
to become the fifth largest in
make it tough for contractors under
the world by 2020 and the third largest
by 2025.
the public-private partnership mode
to exit even after completing a
project.
The 2020
We have
figures
made
projected
a provision
by
consulting
that allows
firms
contractors
appear
to
too
quit
ambitious,
the
project
given
if they
the
bring
current
in
ground
another
realities.
concessionaire
But banks
with
can
consent
reach that
from
target
the
if
government.
they can make
We
a
are
paradigm
hopeful
shift
that
on
two
things
fronts
may
-
improve
achieving
with
economies
this new
of
scale
provision.
and size and reinventing their
business models to reach out across
the
Will
country.
there
"Significant
be a penalty
opportunities
on developers
lie ahead
for
for
exiting
our banks
projects?
to leverage
The
on
Union
the three
Law
components
Ministry has
-
clarified
that
technology,
processes
a concessionaire
and people
will
-to attain
be
penalised
true banking
if there
productivity
is any fault
and
on his
efficiency,"
part. Besides,
stresses
the maximum
RBI Deputy
penalty
Governor
will amount
K C Chakrabarti.
to 1 per cent of the total
cost of the project.
All said and done, Indian banks are
still What puny do compared you consider with banking as major giants
challenges of the world. facing Only the sector? two banks,
SBI Environment - the country's and largest forest lender clear-ances
ICICI are Bank a major - the challenge. country's larg-
We
and
est should private get the lender clearances - figure in in advance the list
of so top-100 that work global can be banks started. at 38th and
99th We ranks will take respectively. up projects Domestic that have
banks got stuck do with need the to move Ministry into of the Environment
especially and Forests through and try mergers to clear
big
league,
and them. acquisitions. I am confident More that importantly, Prime Minister
must Manmohan get their Singh-appointed
business models
they
right high-level to crack committee the financial to inclusion expedite
conundrum. clearances of These projects paradigm of national shifts
can importance boost banks will to clear outgrow road the projects 2020
projections. speedily.
"PM's panel will
expedite road
projects"
Minister for Road Transport and Highways
32 14 SEPTEMBER OCTOBER 2013 2013 INDIA BUSINESS JOURNAL

﻿

﻿CONSUMER DURABLES
Fingers crossed
Consumer durable companies, which are set to hike
prices, are hoping that the ongoing festive season
pushes up sales amid economic slump.
SHRUTI VERMA KHARE
This festive season will be an
expensive one for those looking
to buy consumer durables.
Many consumer durable companies
are planning a fresh round of price
hike of up to 5 per cent to offset
impact of weak rupee. Besides, the
additional cost incurred to comply
with changes in energy efficiency
rating norms will also add up to the
price tag.
While Voltas and Blue Star have
already firmed up plans to increase
prices of their air conditioners
(ACs), Panasonic and Sony are keeping
a close watch on the rupee movement.
"There is double pressure on
consumer durable companies. One is
the rupee depreciation and the other
is change in energy efficiency
norms. Companies are already under
pressure," admits B Thiagarajan, the
executive director and president (air
conditioning and refrigeration products
group) of Blue Star.
"Despite knowing the negative
market sentiments for any further
price hike, we have no choice, but to
increase prices. We cannot absorb
higher costs anymore. Margins remain
under pressure and we will have
to pass on the cost to customers and
hike prices by up to 5 per cent," adds
As the
consumer
spending is
going down
due to
slowdown in
the market,
companies
have to take a call on
increasing prices as it may
impact sales."
VIJAY CRISHNA
ED, Godrej & Boyce
Mr Thiagarajan.
Voltas Chief Operating Officer
Pradeep Bakshi echoes the views of
Mr Thiagarajan. "We will be forced
to increase prices when the new star
rating norms become applicable. The
price hike will be around 3 per cent.
Besides, there is pressure on margins
due to the rupee depreciation,"
notes Mr Bakshi.
Rupee effect
The rupee, which had plunged to an
all-time low, inching close to 69 to
a dollar, is gradually firming up, with
the Reserve Bank of India reversing
some of its tough monetary policies
earlier. The sliding rupee has become
a huge challenge for companies to
hold on to existing product prices as
imported raw material and finished
goods have become costlier. "We are
keenly observing the rupee movement
and will pass on the price rise
to consumers only if the currency
depreciates further. The quantum of
price hike will depend on the situation,"
notes Panasonic India Managing
Director Manish Sharma.
Likewise, Sony India is also keeping
its options open. "We are monitoring
the situation, but we also do
not want to demotivate customers by
hiking prices in this tough market
condition," reasons out Tadato
Kimura, the head of marketing of
Sony India.
"Margins are under pressure because
of the rupee-dollar equation.
It is one of the biggest challenges for
companies right now. As the consumer
spending is going down due to
slowdown in the market, companies
have to take a call on increasing
prices. Price hike in this market may
impact sales," points out Godrej &
Boyce Mfg Company Executive Director
Vijay Crishna. Godrej Appliances
is a part of Godrej & Boyce
Mfg Company.
New energy norms
Meanwhile, compliance with new
energy efficiency ratio norms will
further increase costs for consumer
34 OCTOBER 2013 INDIA BUSINESS JOURNAL

﻿"We will be
forced to
increase
prices by
around 3
per cent
when the
new star
rating norms become
applicable."
PRADEEP BAKSHI
COO, Voltas
"We are
keenly
observing
the rupee
movement
and will pass
on the price
rise to
consumers only if the currency
depreciates further."
MANISH SHARMA
MD, Panasonic India
gest festival in eastern India. It plans
to sell 85,000 units of Bravia LCD
TV during the period, eyeing a 42 per
cent share of the flat panel display
market in east India. Sony plans to
launch a slew of promotional offers
for its customers across all product
categories, including Bravia, Xperia,
Vaio and Cyber-shot digital camera.
Consumer durable companies are
exploring various alternatives and
looking at supplements to their existing
business models. They are increasing
penetration in markets beyond
metros, tier-I and tier-II towns
and moving deeper into semi-urban
and rural areas to push sales. South
Korea's Samsung Electronics has
decided to bombard the market with
a number of products in each category
at every price point, from low to premium,
to cover every potential customer
besides expanding the retail
footprint in newer markets. Homegrown
Videocon has a different strategy
as it gets 65 per cent of revenue
from rural markets, quite the oppo-
"Margins
remain
under
pressure
and we will
have to pass
on the cost
to customers
and hike prices by up to
5 per cent."
B THIAGARAJAN
ED, Blue Star
"We are
monitoring
the situation,
but we also
do not
want to
demotivate
customers
by hiking prices in this tough
market condition."
TADATO KIMURA
Head (Marketing), Sony India
durable manufacturers. According to
the Bureau of Energy Efficiency, the
energy efficiency ratio for all star
bands will go up from January 1,
2014. It will mean that for star bands
ranging from 1 to 5, companies will
have to decrease the energy consumption
for each of the star ratings.
Most electronic appliances, such
as television (TV), refrigerators and
ACs, display their products' star ratings
to attract more customers. The
companies are planning to introduce
products complying with the new star
ratings from October to ensure
smooth transition to the new energy
efficiency norms.
Most companies roll out discounts
and freebies during the festive
season to cash in on increased
consumer spending and push sales.
The festive season, which starts with
Ganesh Chaturthi, peaks at Diwali and
ends with the Christmas-New Year
weekend, accounts for more than 30
per cent of total sales for most of
the consumer durable companies.
But as companies raise prices to protect
their margins, they fear that
higher prices will have an impact on
their sales.
Festive fervour
However, consumer durable manufacturers
remain hopeful of doing
good business in the festive season
ahead. Companies have begun chalking
out plans for discounts and free
gifts with their products for the peak
season ahead.
Consumer electronics and consumer
durable companies, such as
Sony India and LG India, have set
mega sales target this festive season
as usual despite the weakening rupee
raising prices of their products. Korean
consumer electronics major LG
expects 20 per cent growth, while
Japanese electronics giant Sony India
is targeting a growth of 30 per
cent in this season over the corresponding
period last year.
Sony India has announced its business
plans for Durga Puja, the bigsite
of the trend. Besides a wide rural
network, Videocon still sells
products, like CRT TVs and singledoor
and direct cool refrigerators,
which still sell well in rural areas
because of the costing.
In the meantime, big retailers
opine that consumer spending will
remain robust in this festive season
because of aggressive promotional
schemes, such as the 0 per cent EMI
(equated monthly instalment) model
on credit cards. Despite the looming
shadow of economic slowdown,
customers are warming up with their
festival shopping plans.
Many shoppers are eagerly looking
out for discounts and combo offers
to buy home appliances and
other consumer durables. Some of
them are eyeing e-commerce sites,
such as Flipkart and Myntra, to get
better deals. As the festive season
gathers steam, consumer durable
companies are keeping their fingers
crossed for festivities to drive up
their top lines.
INDIA BUSINESS JOURNAL OCTOBER 2013 35

﻿FOCUS
Bleak signals
Poor PMI figures in the past two months cast a dark
shadow on the upcoming second quarter GDP numbers
DHRITI RANJANA RAY
Private sector activity across
emerging market economies
edged a little higher in August,
owing to modest improvements in
business conditions in China and
Russia. However, India posted the
steepest rate of decline during the
month. According to global financial
services major, HSBC, a group of
large emerging economies, including
India, Indonesia, Brazil and Turkey,
is grappling with deeper supplyside
problems, owing to low domestic
savings, infrastructure bottlenecks
and loss of competitiveness
with rising unit labour costs.
Experts believe that regaining export
competitiveness usually takes
longer and requires stringent structural
reforms. They add that it is not
business as usual in the emerging
Leif Eskesen
Chief Economist, HSBC
world and investors could become
more selective when investing in
emerging market economies. "Asian
manufacturers can exhale amid better
orders, but the foreign exchange
turmoil in India and Indonesia shows
that they are not out of the woods
yet," notes Frederic Neumann, the
India Sinking
Rebound in August EMI to
50.7 from the July figure
of 49.5
Robust emerging market
output fuelled by China and
Russia
India, Indonesia, Brazil
and Turkey grappling with
economic slump
India's August manufacturing
PMI in the red at 48.5
Further dip in August services
and manufacturing activities
to 47.6 from 48.4 in July
Russia, which helped offset a steep
deterioration in India and a marginal
worsening in Brazil. Of the four largest
emerging economies, China and
Russia posted mild increases in output
following declines in July. Brazil
registered a further marginal drop
in activity, while India posted the
steepest rate of decline since March
2009.
Indian gloom
The currency crisis in India had
peaked in August, when the rupee
was at an all-time, intra-day low of
68.85 to a dollar. Since then, the currency
has seen some correction.
Newly-appointed Reserve Bank of
India (RBI) Governor Raghuram
Rajan has whetted the appetite of investors
with a spate of measures, including
steps to boost the rupee and
revive economic growth.
India's manufacturing sector activity
contracted for the first time in
over four-and-a-half years in August
as both output and business orders
witnessed a significant decline. The
HSBC/Markit PMI for the manufacturing
industry stood at 48.5 in August,
lower from 50.1 in July, indi-
Frederic Neumann
Co-Head (Asian economic research), HSBC
"The numbers we have seen so
far for July and August for both
manufacturing and service
sectors point to a further
slowdown in GDP growth
during the second quarter."
HSBC co-head of Asian economic
research.
Emerging market activity turned
positive in August after losing traction
in every month since April and
experiencing outright contraction in
July. The HSBC Emerging Markets
Index (EMI) - a monthly indicator
derived from the Purchasing Managers'
Index (PMI) surveys - recovered
from July's post-crisis low in August,
but signalled only a marginal rise in
output across global emerging markets.
The EMI rose from 49.5 in July
to 50.7 in August, the first rise in the
headline figure since this March.
The improvement in August was
largely due to modest improvements
in business conditions in China and
"Asian manufacturers can
exhale amid better orders, but
the foreign exchange turmoil in
India and Indonesia shows
that they are not out of the
woods yet."
36 OCTOBER 2013 INDIA BUSINESS JOURNAL

﻿cating an overall contraction. The
August index reading was the first
sub-50.0 reading since March 2009.
The PMI reading comes close on the
heels of a bleak official figure that
showed that the country's economic
growth in the April-June 2013 quarter
slid to 4.4 per cent, the lowest in
past several years, pulled down by
drop in mining and manufacturing
output.
"Manufacturing activity contracted
in August for the first time
since March 2009. This was led by a
decline in new orders, especially
export orders," notes Leif Eskesen,
HSBC's chief economist for India
and ASEAN. Since May, the index
was barely managing to remain above
the crucial 50 mark that divides
growth from contraction. But business
conditions in the manufacturing
sector deteriorated during August
for the first time in over four years,
with both output and new orders falling
at faster rates.
According to HSBC, amid reports
of fragile economic conditions and
subdued client demand, new orders
placed with Indian manufacturers fell
in August. Moreover, new business
from abroad also declined, ending an
11-month sequence of growth. The
report further notes that input and
output price inflation slowed despite
weakening of the currency, which
may reflect the softening demand
conditions and declining pricing
power. "Notwithstanding the weak
growth backdrop, the RBI will likely
keep its liquidity tightening measures
in place for a while to help contain
the depreciation of the currency.
Combined with the heightened macroeconomic
uncertainty, this will
continue to weigh on growth in coming
months," adds Mr Eskesen.
Deeper trouble
Meanwhile, India's private sector activity
contracted further in August,
reflecting faster contraction of both
manufacturing and services output
amid decline in new orders and tough
A drop in mining and manufacturing output pulled down India's April-June 2013
quarter GDP growth to 4.4 per cent.
Service sector
activity slowed further
in August, led by weaker
new business flows,
which led to a slowdown
in employment growth
and a decline in
sentiment among
service sector
companies
economic conditions. The HSBC India
Composite Output Index, which
maps both services and manufacturing
activities, fell to 47.6 in August
from 48.4 in July. The index has
posted below the 50 mark - which
marks contraction - for the second
consecutive month.
According to HSBC, the contraction
was largely on the back of a decline
in new orders for the Indian
private sector, which fell at the fastest
pace in almost four-and-a-half
years as uncertain economic outlook
dampened client confidence. Meanwhile,
the services sector, which accounts
for around 60 per cent of the
country's Gross Domestic Product
(GDP), fell from 47.9 in July to 47.6
in August, indicating a further, albeit
moderate, contraction of output
across the service economy.
"Service sector activity slowed
further in August, led by weaker new
business flows, which led to a slowdown
in employment growth and a
decline in sentiment among service
sector companies," adds Mr Eskesen.
Meanwhile, the degree of optimism
across the service sector weakened
for the third consecutive month and
on the employment front, there was
a decline in job creation. Moreover,
price pressure firmed up as input
costs rose and were passed on to final
prices.
"The numbers we have seen so far
for July and August for both manufacturing
and service sectors point to
a further slowdown in GDP growth
during the second quarter,"
Mr Eskesen reveals. It would not be
surprising if the June-September
2013 quarter GDP figure pops up
another shocker.
INDIA BUSINESS JOURNAL OCTOBER 2013 37

﻿PHARMACEUTICAL
MUNISH SHEKHAVAT
Global pharmaceutical companies
are annoyed with the way
India deals with issues related
to intellectual property rights
(IPR). Novartis India, the Indian subsidiary
of the Swiss drug company,
Novartis, has warned that India is losing
investments from multinational
companies (MNCs) in research and
development (R&D) to China due to
a lack of an ecosystem that fosters
innovation.
Novartis India, which has lost a
patent case for its cancer drug
Glivec, notes that India needs to have
fast-track courts to deal with IPR disputes.
The Supreme Court had rejected
the company's plea for a patent
on cancer drug Glivec in April.
"The recent cases that we have
seen in the area of IPR do not in any
way point to an environment that encourages
innovation. A patent is
granted and then revoked. A patent is
granted and then violated. A patent is
granted and then a compulsory licence
(CL) is issued," laments
Novartis India Vice- Chairman and
Managing Director Ranjit Shahani.
He points out that China has been
able to attract leading global companies
to invest in R&D, while India has
been unable to do so. "What we certainly
would like to see is an ecosystem
that fosters innovation and fasttrack
courts to hear and decide cases
involving IPR. China has drawn all the
leading global companies to invest in
R&D there, while India has not. That
should serve as food for thought,"
Mr Shahani adds.
Biocon Chairperson and Managing
Director Kiran Mazumdar-Shaw
has also lashed out against the IPR
environment in India. India needs to
show the world that it respects IPRs
if it wants global pharmaceutical
companies to invest in India, points
out Ms Shaw.
She urges India to be judicious
when granting CLs for patented drugs
Strident notes
Global drug giants flay India for disregarding IPRs and
unleashing protectionist measures against competition.
to domestic drug-makers and adds
that CLs should be granted during an
emergency, pandemic or under acute
drug shortage and "not on the basis
of affordability". "We must understand
that IPR is important for India
to embrace and respect and protect.
If you cannot demonstrate that IPR
is safe in the country, I think you are
not sending the right message, you
are not going to find people investing
in India," Ms Shaw cautions.
"CLs should be granted during an
emergency, pandemic or under
acute drug shortage and not on
the basis of affordability."
KIRAN MAZUMDAR-SHAW
CMD, Biocon
CLs galore
Last year, the government invoked
the provisions of CL on Bayer
Corporation's cancer treatment drug
Nexavar and permitted Hyderabadbased
Natco Pharma to manufacture
and sell the drug at a price lesser by
over 30 times charged by its patentholder.
An order, which would be of
great relief to the kidney and liver
cancer patients, was issued by India
Patents Office as a CL under Section
84 of the Patents (Amendment) Act,
2005, which is in compliance with
the Trade-Related Aspects of Intellectual
Property Rights (TRIPS)
agreement of the World Trade Organization.
Natco was allowed to sell the drug
at a price not exceeding Rs 8,880 for
a pack of 120 tablets required for a
"The recent cases that we have
seen in the area of IPR do not in
any way point to an environment
that encourages innovation."
RANJIT SHAHANI
V-C & MD, Novartis India
month's treatment as compared with
a whopping Rs 2.80 lakh per month
charged by Bayer for its patented
Nexavar drug. However, the CL was
roundly criticised by drug companies,
especially MNCs and big pharmaceutical
companies involved in
high-end R&D.
Ms Shaw points out that CL is a
38 OCTOBER 2013 INDIA BUSINESS JOURNAL

﻿very clear example of where India
needs to evolve. "There is a difference
between a patent challenge and
a patent abuse. These are two very different
things. What we are indulging
in is basically saying that we have a
right to any patent, which means to
say that we don't respect patents, we
cannot do that," underlines the
Biocon chief.
She adds that India needs to make
sure that whatever it is doing in the
realm of IPR is done with a sense of
global responsibility. "You don't want
to be alienated from the global community,
saying that India doesn't respect
IP, India is killing our IPR,"
notes Ms Shaw.
Cautious approach
Global medicine manufacturers have
flayed India for not following the
TRIPS agreement, both in letter and
spirit. "If India truly sees itself as a
global leader, it'll then have to lead
by example, it has to make sure that
whatever you do in the realm of IPR
is justifiable, is responsible and does
not amount to abuse and theft. That
is what is happening today," rues
Ms Shaw.
Mr Shahani, who is also the president
of the Organisation of Pharmaceutical
Producers of India (OPPI),
notes that foreign direct investment
(FDI) will lead to upgrade of the
country's skills in the sector. "One
area that needs to be re-looked at by
the government is FDI in both
brownfield and greenfield ventures in
the pharmaceutical space. India needs
to upgrade its pharmaceutical skills
and FDI should be looked at in this
context," adds Mr Shahani.
The OPPI, an association of research-
and innovation-driven pharmaceutical
companies in India, believes
that unrestricted FDI in the
pharmaceutical sector, both
brownfield and greenfield, is in the
interest of the country and will help
India in the short, medium and long
terms. Foreign investments will help
add significantly to India's scientific
Policy flip-flops are likely to hamper the image of India as a global R&D hub.
capabilities and, in turn, expose scientific
talent to global best practices
and processes. All these will add to
the long-term interest of India and the
patients, the Novartis India chief
points out. "Capacity building and
sustained drug discovery
programmes, even within the domestic
industry, should be seen in the
longer-time horizon," he emphasises.
Currently, India permits 100 per
cent FDI in pharmaceutical industry
through the automatic approval route
While home-grown
companies have raised the
spectre of global drug giants
killing the generics industry,
MNCs are critical of India
changing the rules of the
game midway.
in new projects. But foreign investment
in existing pharmaceutical
companies is allowed only through
the Foreign Investment Promotion
Board's approval. The government is
contemplating major changes in the
current FDI policy in the pharmaceuticals
sector to protect domestic generic
industry in the wake of increasing
acquisitions of home-grown
companies by foreign players.
"All stakeholders must come together
to find sustainable solutions
that balance the need for innovation
with the need for medicines that are
affordable, all within a robust intellectual
property rights environment,"
stresses Mr Shahani, adding that setting
up fast-track courts to address
IPR disputes will certainly be a step
in the right direction.
The Indian pharmaceutical industry
is at the crossroads today, with
the sector embroiled in many conflicts.
While home-grown companies
have raised the spectre of global
drug giants killing the generics
industry, MNCs are critical of India
changing the rules of the game midway.
It would be immature on the part
of the government to panic over
MNCs trampling the domestic industry
just because a few home-grown
companies were bought by global
giants. Instead, a cautious approach
and a firm, unwavering policy are the
right prescription for the pharmaceutical
industry's growth.
INDIA BUSINESS JOURNAL OCTOBER 2013 39

﻿PRIVATE EQUITY
Back in action
After a long lull, PE firms are turning their focus back to
India and driving up sale and acquisition deals.
KUMAR SHANKAR ROY
Private equity (PE) firms are on
a roll. The PE firms were able
to exit 29 Indian companies
during the quarter ended June 2013,
up 38 per cent over the 21 exits in
the same period a year ago. According
to a report from Venture Intelligence
- a research service focused
on private company financials, transactions
and valuations in India - the
PE firms' exits in the Q1 of FY14
were 21 per cent higher than those -
24 exits - in the Q4 of FY13.
Of the divestment in the previous
quarter (April-July 2013), 21 represented
complete exits, while the remaining
exits were partial. Sale of
shares in already-listed companies
through the markets accounted
for nine exits during the
Q1 of 2013-14 compared with
four in the corresponding period
of 2012-13. Similarly, strategic
acquisitions were seven against
six in the previous year, secondary
sales (purchase of shares
held by one PE firm by another)
were six against seven earlier,
while buybacks accounted for
six as against four in the yearago
period. However, these figures
do not include exits in the
real estate segment.
The sole PE-backed initial
public offer (IPO) during the
quarter under consideration was
that of JustDial, the internetand
mobile-based local
search company. The public
float provided a healthy exit for
its investors.
Smart exits
PE investors successfully timed
the run-up in the markets between
mid-April and end-May to exit
a few of their investments in listed
companies. TPG Capital mopped up
Rs 1,652 crore from sale of Shriram
Transport Finance (STF), marking
the largest public market sale and
complete exit of the PE firm from
the truck finance company. The sale
of its final 10 per cent holding in STF
brought TPG a return of over six
times its investment of Rs 547 crore
in the company starting from February
2006.
Another significant complete exit
through the market during the first
quarter was that by Warburg Pincus
from Havells India. The PE firm's
sale fetched it about 2.5 times return
on the Rs 484 crore investments it
Top Sale Deals
PE FIRM COMPANY AMOUNT
(Rs cr)
TPG Capital STF 1,652
SAIF, CSS Corp 1,500 +
Goldman Sachs
Sierra Ventures
Warburg Pincus Havells India 1,210
SAIF Partners, JustDial 770 +
Tiger Global,
Sequoia Capital,
SAP Ventures
Seedfund, redBus 550 +
TSJ Media,
Inventus Capital,
Helion Ventures
had made in the electric equipment
and domestic appliance manufacturer
beginning from October 2007.
Apax Partners, ICICI Venture,
Norwest Venture Partners and a few
other PE firms were able to net decent
returns from partial exits
through the market during the quarter.
Apax Partners gained Rs 128
crore from its sale of shares in
Apollo Hospitals, while ICICI Venture
and Norwest Venture Partners
offloaded a part of their holding in
non-banking finance company
Shriram City Union Finance.
Hectic deals
The quarter under review also witnessed
hectic secondary sale transactions
among global funds, with
both old and new firms making significant
investments to buy out their
peers. Warburg Pincus sold off
shares in off-highway tyre-maker Alliance
Tire Group to KKR for $460
million (about Rs 2,500 crore). During
the same quarter, Warburg Pincus
bought a 30 per cent stake in
auto components company
Avtec from PE firm Actis for an
undisclosed amount.
The $270-million (over
Rs 1,500 crore) buyout of PE
investors - SAIF, Goldman
Sachs and Sierra Ventures - in
IT services company CSS Corp
marked the first direct investment
in an Indian company by
the Partners Group.
The strategic sale of online
bus ticketing service redBus to
South Africa-headquartered
media group Naspers for a reported
$100 million (Rs 550
crore) capped a good quarter for
venture capital (VC) exits.
Starting in July 2007, redBus
had raised about $9.3 million
(about Rs 50 crore) from VC
investors, including Seedfund,
TSJ Media, Inventus Capital and
Helion Ventures.
Six out of the seven strategic
sales were of VC-backed IT
40 OCTOBER 2013 INDIA BUSINESS JOURNAL

﻿companies. These included sale of
online marketing services company
WebChutney by Capital18 to Japanese
advertising agency Dentsu and
acquisition of Nexus Ventures' stake
in mobile productivity applications
company firm by Yahoo. The sole
non-IT exit via strategic acquisition
was that of IFC's 12 per cent stake in
HNG Float Glass by Turkey's Trakya
Cam Sanayii for an undisclosed
amount.
The real estate sector witnessed
five buybacks of PE investors' stakes
by developers or their promoters.
IL&FS Investment Managers (IIML)
sold its stake in Bhartiya City - a 125-
acre integrated township project in
Bangalore - to the township's promoters
for Rs 325 crore. IIML had
invested Rs 150 crore for a 26 per
cent stake in 2007 through compulsorily-convertible
preference shares.
Listed developer Godrej Properties
bought back the stake held by
HDFC PMS in two of its projects in
Chennai and Chandigarh. Listed real
estate company Parsvnath Developers
disclosed that it had repatriated
Rs 34.56 crore to PE investor Sun
Apollo from the Exotica Gurgaon
residential project. ICICI Prudential
PMS too exited its investment in
Shriram Properties' Shriram Sahaana
and Suhana residential projects in
Bangalore.
End to gloom?
On the investments side in the April-
June 2013 quarter, PE investments
more than doubled to $2.3 billion
(Rs 14,000 crore) through 82 deals,
says a PricewaterhouseCoopers
(PwC) report. The PE investments in
the first quarter of 2013-14 were
buoyant compared with those in the
preceding quarter (January-March
2012-13), which recorded 66 deals
worth $929 million (more than
Rs 5,500 crore). The PwC
MoneyTree India report notes that on
a year-on-year basis too, there was
an 18 per cent surge in deal value in
the Q1 of FY14 over the
The real estate sector witnessed five
buybacks of PE investors' stakes by
developers or their promoters.
year-ago period.
Sector-wise, manufacturing led
the April-June 2013 quarter with investments
worth $796 million
(Rs 4,800 crore) from six deals.
However, with 31 deals worth $453
million (around Rs 2,700 crore) during
the same period, the IT and ITeS
sector emerged as the leader in terms
of number of deals and ranked second
in terms of value.
"Traditionally, the IT and ITeS sectors
have been extremely lucrative
for PE investments. The sector has
remained fragmented over the last
few years and so has the inflow of
investments. Hence, consolidation
may be in the offing in the near future,"
notes PwC's Sandeep Ladda,
who tracks technology. "While the
Indian rupee depreciation is likely to
have a favourable impact on the IT
and ITeS segments, the sudden and
large spurt in deals will only add a
fillip to the otherwise-gloomy global
market," adds Mr Ladda.
The energy sector witnessed the
third-highest investment in terms of
value with investments worth $235
million (Rs 1,450 crore) from four
deals compared with $159 million
(Rs 960 crore) from two deals in the
previous quarter. The banking, financial
services and insurance (BFSI)
sector witnessed a considerable drop
in investments from $264 million
On a Buying Spree
PE firms step up purchases in
April-June 2013 quarter
Pump Rs 14,000 crore in
82 deals
Manufacturing with Rs 4,800-
crore deals topping the chart
IT and ITeS with 31 deals
worth Rs 2,700 crore leading
in terms of number of deals
Energy third-highest in
investment value with
Rs 1,450 crore
BFSI's Rs 850-crore deals
disappointing over previous
quarter numbers
Mumbai top among regions
with Rs 7,200-crore deals
(more than Rs 1,600 crore) across
10 deals in the preceding quarter (Q4
of 2012-13) to $138 million (about
Rs 850 crore) from five deals in the
first quarter of 2013-14.
Region-wise, Mumbai topped the
chart, with the highest level of funding
at $1.2 billion (Rs 7,200 crore)
and with 20 deals, it had a majority
share in terms of number of deals as
well. The National Capital Region
retained its place in the top-three regions
on the basis of number of deals
(16 deals).
Despite the grim economic situation,
PE firms have begun taking interest
in India again. They are perhaps
sensing the first stirrings of an
economic turnaround.
INDIA BUSINESS JOURNAL OCTOBER 2013 41

﻿GUEST COLUMN
Lessons from trenches
Military strategies that win wars and secure the nation's
borders can play a vital role in the corporate world too.
MAJ (RETD) RAVINDRA SINGH
Indian defence forces have been
the saviour of the nation as they
have been achieving success on
all possible platforms, from preventing
external aggression and fighting
militancy in troubled States to conducting
relief operation during natural
calamities.
Do you know that there are certain
military skills and values that ensure
success for our forces during
different situations and contingencies?
While some of you would be
aware of them, very few must be
aware of the fact that these cuttingedge
managerial skill sets and values
have great business potential. They
can help you navigate through the
shark-infested waters of the gloomy
economy and recession to generate
high revenues and growth for your
organisation. In this article, we will
highlight these time-tested military
skills and values, which have proved
their mettle in both peacetime and
war.
Mission top priority
While we often see in business that
people are working with individualistic
approach, keeping their own requirements
above an organisation's
aims, in the military, the mission or
the task is given the top-most priority
ahead of everything else. Personal
conflicts, if any, are kept aside, egos
are buried and social differences are
forgotten. All activities seamlessly
join them with one common goal: the
successful completion of the task in
the allotted timeframe in the best
possible manner.
Once every member of any team,
whether in the defence forces or in
business, understands the importance
In the military, leaders pay a lot of attention to creating a healthy environment,
enabling every soldier to take pride in doing his duty.
of the mission or the goal, takes full
responsibility of one's task and gives
the top-most priority to the task, the
bonhomie and brotherhood in a team
increases, resulting in a composite
and cohesive team. Such strong and
focused teams have the capabilities
to take on challenging tasks and
achieve results, whether in the
battleground or in the business
world.
Strong leadership
Leadership plays a pivotal role in the
success of any mission. India is one
of the most diverse countries in the
world and our forces draw troops
from all parts of the country; soldiers
from all possible castes, religions,
races and regions. Thus, the role of a
military leader is challenging enough
not only to keep the team integrated,
but highly motivated as well.
The transformational style of
command used for decades by our
military leaders has been very successful
in leading troops. In the Indian
military, these leaders are multitasked
and responsible for training,
fitness, administration, operational
effectiveness, well being, morale and
motivation of their teams. Many a
time, in the corporate world, incentives
or the reward system is approached
as the most influencing way
to keep the team motivated. However,
in the military, leaders pay a lot
of attention to creating a healthy environment,
wherein every soldier
takes pride in doing his duty, which
generally includes difficult tasks in
trying circumstances, requiring high
level of motivation. While the reward
system is good as it gives recognition
to an individual and its effect
lasts for some duration, a person
draws much of his motivation from
job satisfaction, for which a conducive
environment is very essential.
Such a working environment in the
42 OCTOBER 2013 INDIA BUSINESS JOURNAL

﻿business world too allows every
member to give their 100 per cent
commitment and that too willingly.
Spirit of sacrifice
Serving with the motto of 'Service
before Self", a warrior displays the
spirit of selflessness to its rare extreme
as he sacrifices his life for the
cause of duty. History of our armed
forces is full of such examples,
wherein our soldiers have laid down
their life while protecting the best
interests of the nation. Such has been
the spirit of sacrifice of our martyrs
that they continued doing their task
even when seriously injured.
A very important business lesson
drawn from here is that if a leader of
any organisation works with selfless
attitude, he or she draws positive attention
of the team members and
gains wilful support of the team. This
spirit, like many other positive traits,
is contagious and thus the team
members draw inspiration and many
others start indulging in selfless act
for the interest of the organisation.
In business, it also motivates one to
keep the interests of your customers
and your organisation much
ahead of your own interests as this
way one won't have to worry about
losing credibility of clients or losing
one's job.
Flexible & adaptable
The Indian military is active on numerous
fronts, such as preventing
infiltration on the western borders,
fighting with militants in north-eastern
States and in Jammu and Kashmir
or aid to civil authorities during
natural calamities. All these situations
are complex and dynamic,
fraught with a lot of uncertainty. Such
changing environment demands military
leaders to be robust, innovative,
decisive, adaptive and flexible in
their approach.
The continuous deployment of our
forces in such hazy environments has
transformed our military leaders into
adaptive leaders who don't get uneasy
when faced with a rapidly- changing
The transformational style of command used for decades by our military leaders
has been very successful in leading troops.
situation. Rather, they are willing to
meet such challenges willingly with
available resources and thus take the
change as an opportunity. With adequate
experience, these leaders are
not only able to identify and understand
the changing situation and the
Strong and focused teams
have the capabilities to take
on challenging tasks and
achieve results, whether in
the battleground or in the
business world.
elements influencing the change, but
are also able to rapidly change the
practices and strategies to meet the
new emerging situations.
Today's business world is no different
from such environment and
the global business environment is
also dynamic and uncertain with less
predictability. Leaders who can approach
business problems with a
flexible and adaptive mind will be
able to lead better in trying circumstances
and their decisions will be
more sound and practical in approach.
Strong moral fibre
When the security of the nation is at
stake, a small compromise on honesty,
integrity and loyalty can be disastrous
for the nation. Entrusted
with responsibilities of this magnitude,
military leaders are selected
through a rigorous scientific test
spread over a period of five days,
wherein psychological tests are conducted
to ascertain whether the candidate
has these values or not. The
same qualities are authenticated
through two more different and independent
tests, making sure that only
those who have these qualities are selected.
Military leaders have to be
impartial and rational in approach
while making a decision, be above
greed for wealth and recognition and
be loyal towards the organisation.
Every action of these leaders proves
their integrity towards the
organisation. These strong moral values
lead to nurturing of a healthy
work ethic in the organisation with
each individual working in unison towards
the achievement of an
organisation's goal.
In a business environment, strong
work ethics lead to positive workplace,
which is highly conducive and
productive with employees drawing
job satisfaction from work. Thus
good work ethics in an organisation
will not only serve the purpose of
employee engagement with high retention
rate, but also optimised output
and improved productivity.
(The author is a prolific writer, entrepreneur
and co-founder of Military To
Corporate (M2C), a welfare platform that
empowers military leaders to step into the
corporate world.)
INDIA BUSINESS JOURNAL OCTOBER 2013 43

﻿GLOBAL WRAP-UP
Lloyd's List to go digital by year-end
, a newspaper that
began life 279 years ago as a
notice pinned to a London coffee
shop wall, will be available
online only from the end of the
year. The last print publication
of , which carries news for the shipping industry,
will be on December 20. A survey carried out earlier this
year found that only 25 of its customers used the print edition.
was founded by Edward Lloyd, who posted
details of ship arrivals, departures and casualties on the wall
of his coffee shop for the benefit of London's 18th century
maritime community.
Starwood Hotels plans Asia expansion
Starwood Hotels & Resorts
Worldwide, the owner of
luxury brands St Regis and W
Hotels, is planning to expand
its hotel chains in Asia to meet
the rising demand in some
countries as well as beat economic
slowdown in other parts of the continent. The company,
which currently operates more than 250 hotels in Asia,
is looking at opening 177 more properties over the next four
years. While growth in some Asian economies, including
China, has slowed this year, expansion in the region's developing
nations is still estimated by the International Monetary
Fund to be almost six times faster than advanced nations.
Koch to buy Molex for $7.2 billion
Privately-owned Koch Industries will buy Molex, a maker of
electronic connectors for companies, including Apple, for
about $7.2 billion. The acquisition will give the billionaire Koch
brothers a way to diversify from their traditional holdings in
energy, chemicals and paper. Koch Industries, which owns
brands such as Brawny paper towels, Dixie Cups and Lycra,
is controlled by Charles and David Koch, two of the world's
richest men. The deal has the support of the founding Krehbiel
family and key executives of Molex.
HSBC rejigs wealth business in West Asia
HSBC Holdings will stop offering
wealth management products
in Bahrain, Jordan and
Lebanon. The British lender's
exit is a part of its strategy to
get out of small or insufficiently-profitable
operations
across the world. HSBC, Europe's biggest bank, has cut its
retail banking business in some West Asian nations, including
the three nations affected in the latest move, and merged its
operations in Oman with a local bank as a part of a threeyear
global restructuring triggered by Chief Executive Stuart
Gulliver.
Surround sound pioneer
Ray Dolby dead
Ray Dolby, 80, the sound
pioneer who revolutionised the
recording industry with
invention of the Dolby noisereduction
system, died
recently at his home in San
Francisco. Mr Dolby's
invention transformed cinema
and home entertainment with
Dolby digital surround sound.
Film industry executives
credit Mr Dolby with enabling
directors, like Steven
Spielberg, to endow sound
with the same emotional
intensity as pictures. Trained
in engineering and physics, he
started Dolby Laboratories in
London in 1965 and soon
afterwards introduced
technology that produced
cleaner, crisper sound by
electronically reducing the
hiss generated by analog tape
recording.
Dell gets shareholders'
nod for buyout
Michael Dell recently
clinched shareholders'
approval for his $25-billion
offer to buy and take Dell
private. The shareholders' nod
ends months of conflict with
the company's largest
investors -Icahn, Southeastern
Asset Management and T
Rowe Price - and removes
the uncertainty surrounding
the world's No. 3 personal
computer-maker. Mr Dell,
who founded the company
from a college dorm room in
1984, has been arguing that
revamping his company into a
provider of enterprise
computing services in the
mould of IBM is a complex
undertaking best performed
outside the spotlight of public
markets.
Lufthansa's Christoph
Franz to head Roche
Roche has picked Deutsche
Lufthansa Chief Executive
Christoph Franz to succeed
Franz Humer as chairman of
its board. Mr Franz, 53, who
has been a member of
Roche's board since 2011, will
stand for election at the
world's biggest cancer drugmaker's
annual shareholder
meeting next March. The
move is a coup for Roche,
whose family owners had
expressed a preference for an
inside candidate. The
announcement comes as the
German airline is in the middle
of a strategic overhaul to try
to cope with rising fuel
cost.and low-cost competition.
Microsoft buys Nokia's
mobile biz for $7.2 bn
Microsoft Corporation will be
acquiring Nokia's mobile
devices and services business
for $7.2 billion in an all-cash
deal. Under the terms of the
agreement, the software giant
will buy the Finnish company's
mobile phone business, along
with all its patents, mapping
and other services. The
transaction is expected to
close in the first quarter of
2014. Analysts opine that the
deal is skewed in favour of
Microsoft and is being seen as
a bailout for Nokia, which has
been struggling to fight
competition from Apple and
Google-controlled Android-
44 OCTOBER 2013 INDIA BUSINESS JOURNAL

﻿based phone-makers.
Darden Media Group to
acquire Maxim
The Darden Media Group has
reached an agreement to buy
Maxim, the bawdy men's
magazine, from the Alpha
Media Group for an undisclosed
amount. Darden will
acquire the entire Maxim
brand portfolio and operating
businesses, which include the
US magazine, sold in 49
different countries with a
reach of nearly 9 million
readers each month, its 15
international editions sold in
34 countries, the Maxim
franchise events and the
brand's digital assets.
Toyota-Way creator
Toyoda no more
Eiji Toyoda, a member of
Toyota's founding family, died
of a heart failure at a hospital
in Toyota, central Japan,
recently at the age of 100.
Mr Toyoda, a cousin of the
auto-maker's founder, Kiichiro
Toyoda, helped create the
super-efficient, Toyota-Way,
production method, served as
president from 1967 to 1982
and engineered Toyota's
growth into a global automaker.
During his years at the
helm, Mr Toyoda led the
development of Toyota
Corolla, one of the best-selling
cars of all time, and Lexus, a
leading luxury brand.
Ex-Nintendo chief
Yamauchi passes away
Hiroshi Yamauchi, who ran
Nintendo for 53 years and
became Japan's richest man,
died recently at 85 years.
Mr Yamauchi was Nintendo's
second-largest shareholder
with about 10 per cent of the
stock and was the principal
owner of the Seattle Mariners
baseball team. The greatgrandson
of Nintendo's
founder, he led the company
from 1949 to 2002 and
transformed the company
from a manufacturer of
Japanese playing cards into
the world's biggest producer
of leading video games like
Mario, Zelda and Donkey
Kong.
Fairfax mulls $4.7-bn
BlackBerry buyout
BlackBerry has reached a
tentative agreement for a
$4.7-billion buyout by a group
led by Fairfax Financial
Holdings, its biggest shareholder,
after years of losing
ground to Apple's iPhone and
Google's Android. The Fairfax
consortium, a property and
casualty insurer run by
Canadian investor Prem
Watsa, is still seeking
financing for the offer, which
will be subject to due
diligence and further
negotiation. BlackBerry, the
one-time smartphone leader,
was forced to seek buyout
offers this year after a new
operating system failed to fuel
a comeback. BlackBerry has
until November 4 to seek
superior offers, which is also
the deadline for the Fairfaxled
group to conduct its due
diligence.
Verizon to buy out Vodafone in mobile JV
Verizon Communications has
agreed to acquire the
Vodafone Group's 45 per cent
stake in Verizon Wireless. The
$130-billion transaction will
give Verizon full control of the
most profitable US mobile-phone carrier. The deal, approved
by both the companies' boards, is expected to be completed
in the first quarter of 2014. The acquisition ends a 14-year
partnership and will let Verizon collect all the future profits
from its wireless unit. For Vodafone, the deal helps shore up
the company's finances as it tries to revive its European businesses
hurt by the region's debt crisis.
GSK brand buys to boost Suntory
Japanese drinks giant Suntory
will be acquiring top-selling
Lucozade and Ribena brands
from British drugs company
GlaxoSmithKline (GSK) for
$2.1 billion. The deal, a part of
Suntory's bid to expand overseas
to counter a shrinking domestic market, is expected to
be completed by the end of the year. The brands will help
Suntory's food and beverage unit move closer to hitting a
$20-billion annual sales target in 2020 and give it a foothold
in Britain, the second-largest drinks market in Europe.
American, MIP Tower in $4.8-billion deal
American Tower Corporation will buy privately-held MIP
Tower Holdings, the parent of telecom tower operator Global
Tower Partners. American Tower's $4.8-billion purchase
plan will help it take advantage of the rollout of 4G wireless
network in the US. American Tower will be paying about
$3.3 billion in cash and also be taking over Global Tower's
$1.5 billion of debt. The deal will add about 15,700 towers in
the US and Costa Rica to American Tower's existing portfolio
of 56,000 towers worldwide.
Hilton plans $1.2-billion IPO in US
Hilton Worldwide Holdings, the
hotel operator owned by the
Blackstone Group, has filed
papers to raise $1.25 billion in
a US initial public offer (IPO)
as hospitality shares trade at
close to their highest level in six years. The world's largest
hotel chain plans to use proceeds from the public issue to pay
down debt. Blackstone took Hilton private in 2007 in a $26.7-
billion deal, which was one of the largest leveraged buyouts
that preceded the 2008 global financial crisis. Founded in 1919
by Conrad Hilton, the hotel chain, has about 4,041 hotels,
resorts and timeshare properties, comprising 665,667 rooms
in 90 countries.
INDIA BUSINESS JOURNAL OCTOBER 2013 45

﻿READERS' LOUNGE
Resourceful & insightful
Former BP chief John Browne chronicles seven key elements that have built as well
as destroyed human civilisation.
SEVEN ELEMENTS THAT
HAVE CHANGED THE
WORLD
Author
JOHN BROWNE
Publisher
WEIDENFELD & NICOLSON
Pages: 304
Price: Rs 499
umans have put the
H earth's resources to
extraordinary use. Carbon
provides us with heat, light
and mobility at the flick of a
switch. From silver came
photography, the preservation
of memories and a task,
which for centuries was confined
to painters, sketchers
and our imaginations. Silver,
in turn, was eventually replaced
by silicon, an element
that enables us to communicate
and transmit information
across the globe in an instant.
This book vividly describes
how seven key elements have shaped the world
around us, for good and for bad. It takes readers on an
adventure of human passion, ingenuity and discovery.
Author John Browne, who had a ringside view of hydrocarbons
as the BP chief, has written a personal account,
travel memoir and history, all centred on seven elements
and the materials containing them. His choice falls on
carbon, the ancient elements - iron, gold and silver - and
uranium, titanium and silicon.
He restricts himself to elements that are solids at
room temperature. Thus oxygen, nitrogen and hydrogen,
which make up the air we breathe and the water we drink,
are not celebrated. Carbon, which forms the basis of life,
is discussed, more because of its combination with hydrogen
to form fossil fuels. Rare earths and other energy
critical elements that are becoming important are
not considered.
The book justifies the inclusion of each element by
signifying their role played in human civilisation. "Iron
has been chosen because it is the backbone of all industry
since the 18th century Industrial Revolution; carbon,
because no energy source has been more potent; silver,
because of its role in the invention of photography; gold,
long popular as a store of value and medium of trade;
titanium, because of its early use as a metal in supersonic
aircraft and deep-diving submarines, but even more
because of its usefulness as a whitening agent; uranium,
because it unleashed the nuclear bomb as well as a carbon-free
source of energy; and silicon, because of its
importance in powering computers.
Gold attracts most often for no apparent reason. "Gold's
allure is timeless and we continue to treat it with an almost
religious reverence. No currency is tied to it and
A scheme mostly sham
As the issues of corruption and scams dominate public
discourse,
takes a close look at the controversial Member of Parliament
Local Area Development Scheme (MPLADS).
Launched two decades ago, to put public funds at the
disposal of every parliamentarian for spending on community
projects in his or her constituency, the scheme
currently costs the exchequer a staggering Rs 4,000
crore per annum at the rate of Rs 5 crore per MP
every year.
Anxious to keep MPs happy, every government has
done its bit to widen their perks and privileges. The
launch of MPLADS and the increase in the annual allocation
per MP from Rs 1 crore to Rs 5 crore is probably
the most obvious example of how MPs are pampered.
However, there would be less criticism of
schemes of this kind if only
there was even a quarter of
this enthusiasm to enforce
ethics. Parliamentarians fail
to realise that the credibility
of Parliament remains intact
only when privileges and
ethics are seen as two sides
of the same coin. While they
clamour for more privileges,
their hackles are
raised when people demand
that the concept of accountability
ought to keep pace
with the burgeoning privileges
of MPs.
The misuse of MPLADS
PUBLIC MONEY,
PRIVATE AGENDA
Author
A SURYA PRAKASH
Publisher
RUPA
Pages: 287
Price: Rs 395
money to promote private enterprise or commercial activity
of organisations is an equally serious violation of
46 OCTOBER 2013 INDIA BUSINESS JOURNAL

﻿no trade is facilitated by it, but still we want more of it,"
writes the author. Indians would know a bit about this lure.
But there is a flip side. "Humanity has committed the
greatest acts of cruelty in the quest for ownership of gold.
Over half a millennium, this precious metal has inspired
intense greed, madness and violence, driving people to
plunder, kill and enslave," Mr Browne notes.
This journey is far from over. We continue to find surprising
new uses for these seven elements. Discover how
titanium pervades modern consumer society; how natural
gas is transforming the global energy sector; and how
an innovative new form of carbon could be starting a technological
revolution. Mr Browne calls titanium, uranium
and silicon the three post-war wonder elements. Uranium
was thought to be an extraordinary source of energy, but
once the destructive power of the atom came to be known,
it began being regarded with dread. Titanium was used by
the US in the Blackbird spy plane way back in the 1960s.
Silicon, however, has enabled the development of smaller,
faster and cheaper computers that have placed immense
processing and communication
powers into our hands.
The book is a unique mix of science,
history and politics, interwoven
with the author's extensive
personal and professional
experience.
About the author
John Browne was the high-profile chief executive of BP
for 12 years and his first-hand international knowledge
of this subject makes him an ideal author for this book.
the guidelines, notes the book and adds that it appears
to be happening on a scale that should cause worry for
all those who hold public money in trusts.
Critics slam the scheme on the grounds that it breeds
corruption and violates the separation of powers between
the legislature and the executive. But MPs say
that the scheme allows them to give something tangible
to their constituents. As the debate rages on, author
Surya Prakash, a leading commentator on public
issues and the affairs of the Parliament, delves deep
into the processes of the scheme and brings forth many
uncomfortable facts about its functioning.
About the author
A Surya Prakash is an author, columnist and distinguished
fellow at the Vivekananda International Foundation.
He has held several important editorial positions
in media organisations in India. He lives in Gurgaon,
Haryana, with his wife, Pushpa Girimaji, a consumer
rights columnist.
A new model
How you can solve our world's biggest problems, kickstart
inclusive growth and create competitive advantage
for your organisation. No longer can we consume
the equivalent of a third of the earth's resources and expect
to remain prosperous in
perpetuity. We need a new
economic paradigm, one that
yields growth in a way that
strengthens the global systems
we rely on daily for
survival, such as the global
water, food and energy systems.
But what does this economic
model look like?
How does it work? How can
companies survive and thrive
in the collaboration
economy? Author Eric
Lowitt provides easy-to-use
frameworks and tools to enable
leaders of industry, government and society to lead
the effort to align growth with sustainable development.
It offers a plan for how the private, public and civil sectors
can successfully collaborate to steward resources,
fortify global water, food and energy systems and spark
a new era of prosperity at the same time.
The author describes case study profiles of the leaders
of the collaboration economy, including Unilever, GE,
Coca-Cola, Nestle Waters North America,
Grieg Green,
Nike, Whole
Foods, Seventh
Generation,
Demos Helsinki
and the European
Parliament. The
book is a model
where the private,
public and civil
sectors collaborate
for prosperity
that can last in
perpetuity.
THE
COLLABORATION
ECONOMY
Author
ERIC LOWITT
Publisher
JOHN WILEY & SONS
Pages: 240
Price: $39.95
About the author
Eric Lowitt is adviser to the world's most select CEOs on
the topics of competitive strategy, growth and
sustainability. He has been named one of the Global Top-
100 Thought Leaders on Trustworthy Business Behavior
by Trust Across America.
INDIA BUSINESS JOURNAL OCTOBER 2013 47

﻿STAR TALK
ARIES Mar 21-Apr 20
Your PR skills and personal relationships will
be in focus this month. Casual meetings with
people who can prove to be of great importance
in your career progress are on the cards.
However, don't spoil your relations with colleagues and
superiors for uncertain future gains. You have to handle
your personal relationships carefully. Be wary about what
you choose to express to people around you as there is a
strong likelihood of they misunderstanding your words.
The possibility of a surgery cannot be ruled out. Take
care of your energy levels.
TAURUS Apr 21-May 21
Your personal life will become a lot
smoother. However, it may not be smooth
sailing on the work front. You may face some
hurdles in getting your tasks completed as
you will need to follow up with colleagues constantly.
Be diplomatic, especially during official meetings, otherwise
your frankness may end up being problematic for
others. In business, you may come across opportunities
to enhance your profits. But it is unlikely that you will
be able to grab all of them as you may be busy with too
many things at the moment.
GEMINI
May 22-Jun 21
You will reap the fruits of your past labours.
Your personal life will also become better.
You are likely to become quite emotional,
subduing your logical and practical abilities.
You need to ensure that people don't take advantage of
your emotional nature. If someone asks for financial help,
do the needful only if you have surplus funds. Don't risk
your financial security unnecessarily. On the business
front, the winds of change may see your profit margins
dwindling, which means you will have to introduce costcutting
measures. But make it a point not to compromise
on the quality of the final output.
CANCER Jun 22-Jul 22
The going may get tough this month. People
around you will come up with all sorts of
suggestions and advice, but you need to make
decisions without getting influenced by them.
After all, you will be responsible for the consequences
of your decisions. So take some firm decisions. On the
personal front, you may have to deal with some challenging
situations. It may even cause rifts in your relationships,
so you better understand that people have their limitations
and it is not right to be demanding.
LEO Jul 23-Aug 23
Channel your enhanced energies in the right
direction. You should consider doing some
physical activities as they will not only help
you divert your energies in the right direction,
but also enable you to keep your cool. As far as
finances are concerned, you may not face any serious
issues this month. However, it will be a good idea to review
your spending habits. If you have decided to buy
something expensive, opt for instalments instead of paying
the whole amount at one go. You will try to increase
your savings, but circumstances may not permit it.
VIRGO
Aug 24-Sep 23
During the month ahead, you will get good
opportunities to showcase your analytical
skills and intelligence and you will grab them
with both hands. Authorities at your workplace
will notice your sincerity and appreciate it. The
planetary positions also suggest a favourable period for
your business. If you want to execute your expansion
plans and open new branches, Ganesha gives you the green
signal. However, handle financial matters carefully as they
could be confusing. One of the major positives of this
month is that you will comfortably tweak your busy schedule
to spend quality time with your family and friends.
LIBRA Sep 24-Oct 23
Your innate quality to strike a fine balance
between conflicting affairs will be fully
manifested this month. However, you may not
be able to deal with financial affairs with the
same finesse as your expenses will be more than your
cash inflow. Avoid borrowing as this is just a temporary
phase. At work, you will be one of the top performers
and the icing on the cake will be the rewards and recognition
you will receive for being an excellent employee.
Don't expect too much though. If you are planning to
change your job, wait for a better period.
SCORPIO Oct 24-Nov 22
This will be a month of mixed fortunes for
you. While there will be success and joy,
there will also be struggle and sadness. The
first few days of October are favourable for
a job change. So, if you are weighing your options, take a
decision and finalise things during this period. If you
decide to stay put, be prepared for handling some tough
challenges. You may have to log in extra hours at the
50 OCTOBER 2013 INDIA BUSINESS JOURNAL

﻿workplace. Avoid taking major decisions during the second
half of the month.
SAGITTARIUS Nov 23-Dec 21
It takes a lot to take criticism positively, especially
for someone like you who detests
even a minor harmless negative comment.
But this month, people around you will be
pleasantly surprised to see a different 'you' as you will
take criticism positively and make improvements in your
personality. You may even go for an image makeover. It
could cost you a lot, though. Expenses look set to be on
the rise and the possibility of you asking for financial
help from some people cannot be ruled out. But you will
find a way out.
CAPRICORN Dec 22-Jan 20
Choose your friends carefully as some
people in your vicinity may be lurking around
just to exploit your influence and financial
strength. Even if you feel like helping them
out of compassion, remember that they will in no way
return the favour in future. So, strictly avoid any financial
transactions. You will become a lot more conscious
about your savings and fiscal security. If you have invested
in the stock market, you may not get expected returns
this month. It is a good period to start interacting with
someone you like or approach marriage bureaus.
AQUARIUS Jan 21-Feb 18
You need to be very clear and careful about
what you choose to communicate this month
as there is a strong possibility of you being
misunderstood. At work, some colleagues
may try and drag you into office politics. You need to be
diplomatic and handle such situations tactfully. Thankfully,
your boss knows how you are as a person. You may
have to pay attention to your appearance and communication
skills. However, be extra careful in verbal or written
communication with your superiors.
PISCES Feb 19-Mar 20
Even minor problems will irritate you a lot
as you will be highly emotional around this
time. Control your emotions as they can lead
you astray. Try to stay calm and composed.
There will be people who will criticise you, at times in a
very rude manner. Don't get bogged down by harsh words,
especially if there is some truth in them. Keep in mind
that criticism may just be the impetus you need to exceed
your own limits. You need to take life positively to
make full use of your potential. Once you do that, you
will receive the appreciation that you deserve.
Rajan effect only after Aug '14
Raghuram Rajan, who took over as the 23rd governor
of the Reserve Bank of India (RBI) on September
4, has his task properly cut out. He has raised
hopes of resurrecting the Indian economy. The markets
have responded positively and the rupee has gained
substantially. Will Mr Rajan be able to put India back
on the high-growth path? Ganesha probes the future to
find out what Mr Rajan's tenure may bring.
Mr Rajan's policy decisions may not be as impactful as
expected because of unfavourable planetary positions in
his horoscope.
Astro analysis
In the Surya Kundali of Mr Rajan, the lord of the finance
house and the ascendant house is the same, which
is the planet of Saturn. Saturn is (in its own
house). Besides, Saturn and Sun are in a combination
in Mr Rajan's Kundali in the first house (ascendant)
itself. Generally, the Sun is considered a signifier of
government positions, government affairs and that is
why we may surmise that he has received the astrological
support for the position he has just bagged.
However, it may be noted that the Mars is not
favourably placed. The house that is believed to signify
policy decisions as well as the house that signifies
the result of one's decisions are ruled by the aggressive
Mars. Owing to these planetary positions,
Mr Rajan's policy decisions may not be as impactful
as we would want them to be.
What Next?
The future largely depends on the status of the transiting
planets and their interactions with the planetary
combinations in force in Mr Rajan's Surya Kundali.
From January 29, 2014, to April 25, 2014, Mr Rajan
will have to be very careful as any of his decisions
taken around this time will be very crucial and may
have far-reaching, long-term effects. Post-August
2014, however, the mighty Jupiter will be in full support
of Rajan's Natal planets, something which will
result in even better policy decisions on his part.
INDIA BUSINESS JOURNAL OCTOBER 2013 51

﻿KNOWLEDGE ZONE
After several twists and turns,
UTI Mutual Fund (UTI MF - AT THE HELM
formerly Unit Trust of India)
finally has a head in Leo Puri. The
over-two-year-old drama surrounding
the selection of Mr Puri, 52,
ended in mid-August as he took
charge as the managing director of
the country's fifth-largest fund
house. Differences of opinion between
UTI MF's four State-owned
shareholders - Life Insurance Corporation
of India, State Bank of India,
Punjab National Bank and Bank
of Baroda - and T Rowe Price - a USbased
investment company - had
stalled the selection of Mr Puri, the
former McKinsey and Warburg
Pincus executive.
LEO PURI
The appointment of Mr Puri, a
double graduate in economics and law from the UK's Oxford and Cambridge
universities respectively, was stalled by UTI MF's institutional shareholders
as his educational qualification did not match the fund house's criterion of
either a management degree or a chartered accountant. But T Rowe Price,
which roped in Mr Puri, was adamant and finally a compromise formula was
worked out. Apart from changing the educational criteria, the top post of the
country's oldest fund house was split into that of chairman and managing
director, with Mr Puri occupying the latter position.
His tumultuous appointment apart, Mr Puri's stint at the fund house is
unique in many ways. He joins an elite list of chief executives who have left
plum posts and fat pay cheques in global firms to take charge of governmentowned
institutions. Besides, he is the first non-civil servant to occupy the
corner office of UTI MF.
The Kolkata-born UTI chief began his career as an executive of Lloyds
Bank International after his degrees in the UK. He was also associated with
law firm JB Dadachanji as well as consulting firms AT Kearney and Mitchell
Madison Group before getting big career breakthroughs with McKinsey and
Co and Warburg Pincus.
As senior adviser at McKinsey, he headed the team that drew up a blueprint
for opening up India's financial sector in the early 1990s. He will now
have to summon up his expertise in finance and consulting to get UTI MF
back in business. The fund house, which remained headless for more than
two years since U K Sinha moved on to head the Securities and Exchange
Board of India, has been lagging with assets under management at about
Rs 75,000 crore.
UTI, a strong brand earlier, lost its leadership position in the past decade
to slip to the fifth rank. Erosion of investors' confidence in the fund house
after the Ketan Parekh scam and the US-64 debacle has pushed UTI MF out
of the aggressive race in the mutual fund industry. Mr Puri, an avid
trekker, could find his new job an uphill task. But years of rich experience in
the world of finance and consulting may come in handy as he prepares for
the steep climb at UTI MF.
Onions are bringing tears once
again as their prices go through
the roof. As onions sell over Rs 80
per kg in major metros from Rs 20
two months ago, is it lower production
or hoarding that is disrupting
householders' budget?
Let us understand the onion economics
of the country before coming
to any conclusion. The country
produced 166 lakh tonnes of onions
in 2012-13, down 4.8 per cent, from
175 lakh tonnes a year earlier. Unlike
other vegetables, onions have a
longer shelf life. About 50 per cent
of the country's produce comes from
rabi onion harvested in April-May and
it can be stored between five and six
months. Another 30 per cent of the
total production is harvested from
late kharif in January-February, while
kharif onion harvested in October-
Edited by Dr Niruben Amin
How can we get rid of anger?
Dadashri: When people tell me that
they try to suppress anger, I tell
them that they must understand
anger first because anger and
peace coexist. If one fails to understand
anger and tries to suppress
it, he may be suppressing
peace instead. So, peace will die.
Anger is not something that one
can suppress. One has to understand
that anger is ego. Analyse
the ego that causes the anger.
If a child breaks something valuable
and we get angry, what kind
of ego is it? It is the kind of ego
that tells us that we have incurred
a loss from the breakage. Here, the
ego is of profit and loss. We have
to think about how we will go about
destroying this kind of ego. Otherwise,
by harboring the ego, the an-
52 OCTOBER 2013 INDIA BUSINESS JOURNAL

﻿F A C T S
F O R Y O U
ONION
November accounts for the remaining
20 per cent of the produce. The
kharif and late kharif crops have a
lower shelf life of about a month,
owing to high moisture content.
Damage to the crop from unrelenting
monsoon rains in parts of the
country is partly to blame for the
scarcity. Unusually-heavy rains in
Maharashtra, Andhra Pradesh and
Karnataka, which account for about
50 per cent of the nation's production,
have led to some disruption in
supply of onions.
However, with production falling
by about 5 per cent this year, there is
With onion production falling by just
5%, there is no justification for prices
shooting up by more than 400%.
no justification for retail prices going
up by more than 400 per cent. An
internal note prepared by the Ministry
of Consumer Affairs nails the
truth. "It was observed that there was
a sharp decline of market arrivals by
around 20 to 40 per cent during June
and July this year compared with the
last year's arrivals. It seems that
stored onions are not released to the
market timely."
The internal note lays bare the
facts. A clutch of traders of
Pimpalgaon and Lasalgaon near
Nashik, the country's largest onion
wholesale market, had purchased the
rabi onion crop from farmers a few
months ago at dirt cheap prices.
These traders are releasing the crop
in small quantities, creating artificial
shortage and earning super-profits.
The government recently passed
the Food Security Bill, which will
spend crores of rupees. If a part of
this huge amount were spent on
cleaning up the vegetable market
and setting up strong supply
chains, onions would not bring tears
every year.
Spiritual Corner: MANAGING ANGER
ger will continue. Anger and greed,
at their very core, are really only ego.
With what understanding is one to
pacify anger?
Anger itself is the ego. One must examine
why this is so. Once we look
into it, we will be able to grasp it. If
we get angry when something breaks,
we have to question why the anger
occurs. The answer would be that
the breakage means a loss. It is because
of the loss that we feel angry.
If one thinks deeply about the ego
and the anger, the very process of
thinking will wash away this ego.
There are circumstances that are
unavoidable.
The head of a household will scold
his servant for breaking things, but
he will remain silent if his son-in-law
were to do the same. He remains silent
with people he considers important
and he yells at the servant,
whom he considers to be inferior. This
is egoism. Do people not become silent
in the presence of their superiors?
If Dada were to break something,
not even a single thought would
cross their minds, but if a servant
were to break something, then what?
Even if people understood with their
buddhi (intellect), it would suffice! If
the buddhi had been developed and
moulded with understanding, there
would then be no arguments. Will the
scolding help restore the damage? It
only gives one a little satisfaction.
Moreover, there is bickering and mental
stress involved in it.
In the above situation, one has
not only incurred a loss from the broken
cups, but also a loss from inner
restlessness. Thirdly, a loss has occurred
because of hostility created
towards the servant. The servant
thinks that he is being cruelly treated
because he is poor. He will harbour
hostility and bind revenge karma for
the next life. God has said that one
should not bind vengeance with anyone.
Wherever possible, bind love, but
do not bind hostility. If you bind love,
that love itself will then destroy the
"Trying to find a solution to stop
anger is foolishness because anger
is a result. It is just like the results
of an examination. The result
cannot be changed. It is the cause
that one needs to change."
PUJYA DADASHRI
hostility. Love overcomes hatred.
Vengeance will breed vengeance
and will continue to do so forever.
Vengeance is the reason for the
endless wanderings, life after life.
Why do these human beings wander
endlessly? Why do obstacles
arise? Where do obstructions arise
from? We should destroy them. It
is because of one's shortsightedness
that one encounters obstructions.
The Gnani Purush gives you
the farsightedness that will enable
you to see things exactly the way
they are.
To be continued...
For more information on
Dadashri's spiritual science,
log on to www.dadabhagwan.org.
Also visit kids.dadabhagwan.org
INDIA BUSINESS JOURNAL OCTOBER 2013 53

﻿HOT SEAT
HR honcho
Yeshasvini Ramaswamy is in constant interaction with people. The young
managing director of e2e People Practices, a Bangalore-based leadership
audit firm that she started in 2005, has groomed over 3,000 people into
entrepreneurs and business leaders. The former people practices head of
Velankani Conglomerate and management consultant of Infosys BPO, Ms
Ramaswamy has designed training modules that help entrepreneurs scale up
their businesses. She puts her expertise in human resource (HR) development
to good use as a visiting faculty at Bangalore's leading business schools and
in several non-profit initiatives and programmes. Sharmila Chand chats up with
Ms Ramaswamy to reveal the human side of the HR expert.
YESHASVINI RAMASWAMY
MD, e2e People Practices
How do you define yourself?
A person who believes in living life
with a clear conscience
What is your philosophy of life?
Life is simple, don't complicate it.
Never be obligated. Stand on your
own two feet because then you
stand for yourself without strings.
What is your passion in life?
To constantly challenge status quo.
Your management mantra?
Empower your team. You will be
surprised at the results.
A business leader you admire
the most…
Steve Jobs and Ratan Tata
Your strength…
Will never give up
Your weakness…
Tend to look at things emotionally,
which sometimes hampers my
ability to say no
What upsets you easily?
Cover-ups and justifications
Your kind of music…
Country and Hindustani Classical
Your kind of a movie…
I am a die-hard romantic, who
loves to solve mysteries.
Sound of Music, Sherlock
Holmes, Mission Impossible-I
Favourite actors…
Julia Roberts, Kajol, Vidya Balan,
Anupam Kher, Shahrukh Khan and
Irfan Khan
Favourite holiday destination…
San Francisco
Golf, Bridge or Tennis…
I love Tennis.
Formal suit or casual attire…
Casual attire
You are a tough, serious boss
or…
A team player who leads from
the front
What do you enjoy the most in
life, generally?
Time with my parents
How do you de-stress?
I sing and read.
Your fitness regime…
Yoga and walking everyday
Your favourite cuisine…
Dal & roti, sauteed veggies
(broccoli), pasta with black olives
Any favourite places you like
to go for dining…
I like the ambience at Taj
Westend, food and ambience at
The Leela. I am more of a street
food person who loves to
experiment.
Your favourite gadget…
iPad
Your stabilising factor…
Prayer and exercise
Your mantra for success…
Never give up. Smile, always.
Be confident of the value you
can bring to the table.
Your dream…
To be able to take a vacation with
loved ones whenever I want
You want to be remembered
as…
Someone who lived her life to the
fullest
Ten years from now, where do
we see you?
Doing the same things I'm doing
now on a bigger and better
platform
Send feedback to sharmila.chand@ibj.in
54 OCTOBER 2013 INDIA BUSINESS JOURNAL